U.S. Reps Urge CFPB to Rethink Short-Term Lending Rules
A bipartisan group of federal lawmakers has asked the CFPB to reconsider some of the agency’s proposed restrictions on short-term lenders, arguing that such loans provide much-needed access to credit for those who have few other alternatives. A group of 12 U.S. Representatives—six Democrats and six Republicans—sent a joint letter to the consumer protection watchdog, urging the agency to consider the potential negative effects of its proposed rules on short-term lending. The CFPB’s proposal could “severely restrict access to credit that millions of Americans rely on,” said the letter, which also noted that one of the CFPB’s mandates is to ensure all consumers have access to markets, according to a report by PYMTS.com. Cutting off access to short-term credit for those who need it to make ends meet would be “devastating,” the lawmakers cautioned.
The letter is the latest warning that some aspects of the CFPB’s proposed restrictions on payday lending—first unveiled by the agency in June 2016—could wind up harming consumers. Many in the financial services industry have noted that the proposals could force many short-term lenders to close up shop, leading to fewer choices and costlier loans for consumers. Decreased access to such loans also could force consumers toward overdraft to meet their short-term credit needs, critics of the plan have cautioned.
The CFPB’s proposal is open for public comment until Oct. 7. Comments can be submitted online at www.regulations.gov. Instructions for submitting comments by additional methods are available in the “Addresses” section of the proposed rule.