monday, 11 february of 2019

Pay day

Trump administration proposes changes to current payday lending practices

The Consumer Financial Protection Bureau proposed revisions Wednesday to “Payday, Vehicle Title, and Certain High-Cost Installment Loans” to rescind rule requirements in an effort to increase consumer access to credit.

According to the Bureau, the Obama-era rules reduced competition, and there was insufficient evidence and legal support for the stricter regulations. The current rules require lenders to make underwriting determinations before issuing payday, single-payment vehicle title and balloon payment loans. The proposal will be open to comment for 90 days.

The Bureau is also proposing to delay the August 19, 2019, compliance date for the mandatory underwriting provisions of the 2017 final rule to November 19, 2020. This proposal will be open to comment for 30 days.

Financial Industry leaders, Dennis Shaul, CEO of the Community Financial Services Association of America (CFSA) released a statement saying “We are pleased by today’s announcement that the CFPB is proposing to rescind part of its 2017 final rule and to delay the compliance date. These rulemakings are good first steps, and we appreciate that the CFPB has recognized some of the critical flaws of the final rule as promulgated during former Director Richard Cordray’s tenure.”

However, many consumer protection and civil rights organizations are concerned for what this will mean for the “predatory” practices of pay day lenders on low income consumers. The interest on payday loans average 400 percent. Hilary Shelton, NAACP Washington Bureau Director and Senior Vice President for Policy and Advocacy said: “Stripping the key protections of this rule is a disservice to the public. With little accountability for their actions, payday lenders have long preyed upon communities of color and drained them of their hard-earned savings.”

(Published by Jurist, February 07, 2019)

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