Rep Jeb Hensarling (R-TX), chairman of the House Financial Services Committee, commended Tuesday the Consumer Financial Protection Bureau’s (CFPB) decision to reconsider its proposed rule on payday or small dollar loans.
The CFPB’s proposed rule sought to put in place safeguards to protect consumers, specifically, a restriction on lenders from making loans that borrowers are unable to pay back with accrued interest. The rule would also limit the number of consecutive loans that can be taken and requires longer repayment timelines.
Payday loans, also called small-dollar loans, provide quick access to cash in exchange for full payment plus variable interest rates, typically within two to four weeks after the loan was provided.
Hensarling said the payday loan rule is an example of overreach by the previous leadership of the CFPB.
“Nearly half of Americans are living on only a $400 or less cushion,” Hensarling said. “That is one sick child in the ER, one broken down car, one emergency away from a financial disaster. For these Americans, a small-dollar emergency loan could be the only lifeline they have to prevent further financial ruin. The CFPB’s rule on payday loans was yet another example of powerful Washington elites using the guise of ‘consumer protection’ to actually harm consumers and make life harder for lower and moderate-income Americans. Americans should be able to choose the checking account they want, the mortgage they want and the short-term loan they want and no unelected Washington bureaucrat should be able to take that away from them.”
He also applauded Acting CFPB Director Mick Mulvaney for reviewing the rule.