The Credit Union National Association (CUNA) released a statement Monday regarding the proposed Payday Alternative Loans (PAL) II rule, supporting expanded opportunities to provide small-dollar, short-term loans.
The National Credit Union Administration is currently providing credit unions the opportunity to comment on the proposal.
“CUNA would prefer a holistic approach to PAL products that would provide credit unions and consumers with flexibility to tailor short-term, small-dollar loans to their needs, without being overly prescriptive,” the trade group wrote in its comment letter. “CUNA retains concern over the overall low representation of credit unions using the existing PAL program, cognizant that the compliance and entry costs often outweigh the potential benefits to consumers.”
CUNA maintains a parameters-based approach would offer greater flexibility for credit unions to engage the market.
CUNA said the proposed 28 percent annual percentage rate cap on PALs in the rule is overly conservative and a $50 application fee limit would ensure sufficient range for institutions to develop pricing options that would permit new market entrants by supporting the actual costs involved. The group also favors allowing individual credit unions to determine ability to repay requirements because they would be better positioned for access to a member applicant’s employment, direct deposits, revolving loans, assets, and overall credit.