The agency proposed Wednesday to waive an underwriting requirement that would require lenders to determine whether a customer is able to repay the loans. He also proposed to push back the date by which lenders must comply with the rule from August to November 2020.
Mulvaney, who is now the acting White House chief of staff, has long been an enemy of the CFPB, arguing as a congressman from South Carolina that the agency had overstepped the boundaries set when it was created in early January. the Obama administration.
The Office of Consumer Affairs said in a statement Wednesday that it was concerned that the underwriting requirement would make it too difficult for consumers to access credit. Payday loans offer small amounts of money and usually have to be repaid in full each time the borrower receives their next paycheck.
The banking industry supports rescinding the rule, saying the burden on lenders to determine borrowers’ ability to repay is too onerous.
“Allowing banks to operate in this space – subject to good banking practice – will prevent bank customers from being forced to rely on less regulated and more expensive sources of funds like online lenders, check tellers. or pawn shops, ”said the president of the Consumer Bankers Association. and CEO Richard Hunt in a statement.
But consumer groups say repealing the underwriting provision would essentially remove the protections offered by the rule.
“What is in place now is a moderate response to an abusive industry. But this industry does not want moderate consumer protections. It does not want any,” said Linda Jun, senior policy adviser at Americans for Financial Reform.
The office will accept comments on postponing the 30-day payday loan rule and, separately, waiving the underwriting requirement for 90 days before making a decision.
“In the meantime, I look forward to working with other state and federal regulators to enforce the law against bad actors and encourage strong competition in the market to improve the access, quality and cost of credit. for consumers, ”Kraninger said.