AFSPA
ALTERNATIVE FINANCIAL SERVICE PROVIDERS ASSOCIATION

January 17, 2018

Trump's CFPB to Rewrite Rule That Cracked Down on Payday Lenders

A U.S. regulator responsible for protecting consumers plans to rewrite a rule approved under its previous Democrat leadership that was meant to prevent payday lenders from saddling cash-strapped borrowers with expensive loans.

The Tuesday announcement from the Consumer Financial Protection Bureau indicates it will ease theregulation passed in October despite a massive lobbying campaign by the industry. The policy shift would be in line with President Donald Trump's pledge to rollback onerous government restrictions on business that he contends are holding back economic growth.

The rule was a priority for former CFPB Director Richard Cordray, an Obama administration appointee who frequently clashed with Republican lawmakers and financial firms. The regulator is now in the hands of Mick Mulvaney, Trump's director of the Office of Management and Budget. Cordray is now running for governor of Ohio.

When Mulvaney took the reins at the CFPB as acting director more than two months ago, he said he wouldn't "set the agency on fire." But he did signal that the controversial watchdog's tone would change immediately.

The payday lending rule limits how often indebted consumers can obtain short-term loans and how much money they can borrow. It applies to businesses, including banks and auto lenders, that offer loans with high interest rates that typically have to be repaid within two to four weeks. Until the CFPB took action, such lenders were mainly overseen by the states.
Dreher Tomkies LLP
CFPB takes first step toward Payday Lending Rule revision

The Consumer Financial Protection Bureau (CFPB) announced Tuesday that it would accept applications from lender to waive the first compliance deadline for its rule on short-term high-interest loans.

The bureau's announcement comes as Acting CFPB Director Mick Mulvaney and staff consider changes to a hallmark rule lauded by progressives.

The CFPB's rule on payday lending, meant to curb cyclical debt among financially distraught consumers, became effective Tuesday. Finalized last year under former CFPB director Richard Cordray, the rule imposes limits on how frequently a lender can offer, collect on and extend high interest loans with deadlines of only a few weeks.

The bureau said in a statement that it would accept applications to waive the April 16 deadline for lenders subject to the rule to register with the bureau. Lenders have until August 19, 2019 to comply with most other provisions of the rule.

The waivers would give the CFPB more time to finish their review and anticipated revision of the rule before lenders would have spent resources preparing to follow it.

Republicans and the financial sector, both frequent CFPB critics, said the payday rule is a misguided attempt to curb consumer debt that would instead eliminate a crucial lifeline for low income communities. Read more at THE HILL

microbilt
CFPB
CFPB STATEMENT ON PAYDAY RULE
FOR IMMEDIATE RELEASE: January 16, 2018

Washington, D.C. - The Bureau of Consumer Financial Protection (Bureau) today issued the following statement on the Payday Rule:

"January 16, 2018 is the effective date of the Bureau of Consumer Financial Protection's final rule entitled "Payday, Vehicle Title, and Certain High-Cost Installment Loans" ("Payday Rule"). The Bureau intends to engage in a rulemaking process so that the Bureau may reconsider the Payday Rule.

Although most provisions of the Payday Rule do not require compliance until August 19, 2019, the effective date marks codification of the Payday Rule in the Code of Federal Regulations. Today's effective date also establishes April 16, 2018, as the deadline to submit an application for preliminary approval to become a registered information system ("RIS") under the Payday Rule. However, the Bureau may waive this deadline pursuant to 12 C.F.R. 1041.11(c)(3)(iii). Recognizing that this preliminary application deadline might cause some entities to engage in work in preparing an application to become a RIS, the Bureau will entertain waiver requests from any potential applicant." Consumer Financial Protection Bureau

SURECARE SERVICES
CFPB to reconsider payday lending rule

Consumer Financial Association of America head Dennis Shaul whose group represents payday lenders, said that he was pleased by the announcement.

"The Bureau's rule was crafted on a pre-determined, partisan agenda that failed to demonstrate consumer harm from small-dollar loans, ignored unbiased research and data, and relied on flawed information to support its rulemaking" he said. 

CFSA Conference
Consumer watchdog considering repeal of payday lending rule

The Consumer Financial Protection Bureau has decided to reconsider a key set of rules enacted last year that would have protected consumers against harmful payday lenders.

The bureau, which came under control of the Trump administration late last year, said in a statement Tuesday that it plans to take a second look at the payday lending rules. While the bureau did not submit a proposal to repeal the rules outright, the statement opens the door for the bureau to start the process of revising or even repealing the regulations. The bureau also said it would grant waivers to companies as the first sets of regulations going into effect later this year.

"We have been worried that the CFPB could revisit these rules. We just didn't expect it so soon," said Lauren Saunders with the National Consumer Law Center.

The cornerstone of the rules enacted last year would have been that lenders must determine, before giving a loan, whether a borrower can afford to repay it in full with interest within 30 days. The rules would have also capped the number of loans a person could take out in a certain period of time.

If allowed to go into effect, the rule would have had a substantial negative impact on the payday lending industry, where annual interest rates on loans can exceed 300 percent.

The industry derives most of its profits from repeat borrowers: those who take out a loan, but struggle to repay it back in full and repeatedly renew the loan. So when the rules were finalized last year, the bureau estimated that loan volume in the payday lending industry could fall by roughly two-thirds, with most of the decline coming from repeat loans no longer being renewed. The industry, which operates more than 16,000 stores in 35 states, would likely see thousands of payday lending store closures nationwide. But most of these rules would not have gone into effect until August 2019. Read more at ABC NEWS

MerchantBoost
CFPB
Final Rule: Payday, Vehicle Title, and Certain High-Cost Installment Loans
November 17, 2017

The Bureau of Consumer Financial Protection has issued this final rule to create consumer protections for certain consumer credit products. The rule has two primary parts. First, for short-term and longer-term loans with balloon payments, the Bureau is identifying it as an unfair and abusive practice for a lender to make such loans without reasonably determining that consumers have the ability to repay the loans according to their terms. The rule generally requires that, before making such a loan, a lender must reasonably determine that the consumer has the ability to repay the loan. The Bureau has exempted certain short-term loans from the ability-to-repay determination prescribed in the rule if they are made with certain consumer protections. Second, for the same set of loans and for longer-term loans with an annual percentage rate greater than 36 percent that are repaid directly from the consumer's account, the rule identifies it as an unfair and abusive practice to attempt to withdraw payment from a consumer's account after two consecutive payment attempts have failed, unless the lender obtains the consumer's new and specific authorization to make further withdrawals from the account. The rule also requires lenders to provide certain notices to the consumer before attempting to withdraw payment for a covered loan from the consumer's account. Read the Rule
A_S Management
CFPB will reconsider its rule on payday lending

The Consumer Financial Protection Bureau has taken the first step to killing or revising the payday lending rule it finalized only a few months ago.
The watchdog agency said in a statement Tuesday that it intends to "reconsider" a regulation, issued in October, that would have required payday lenders to vet whether borrower can pay back their loans. It also would have restricted some loan practices.

If the rule is thrown out or rewritten, it would mark a major shift for an agency that had zealously pursued new limits on banks and creditors before Mick Mulvaney, President Trump's budget director, became the CFPB's acting director.

Mulvaney took over the top job at the CFPB in November following a leadership scramble. A vocal critic of the CFPB when it was run by President Obama appointee Richard Cordray, Mulvaney since said the agency would cut back on burdensome regulations.

Tuesday's announcement does not amount to a formal repeal of the payday lending rule. But it does cast doubt on whether it will ultimately be implemented.

Payday loans provide those in need with small amounts of cash -- typically between $200 and $1,000. The money needs to be paid back in full when a borrower receives his or her next paycheck, and such loans often come with exorbitantly high interest rates.

Consumer advocates that have supported the CFPB's restrictions on the loans say such transactions often take advantage of people in desperate financial situations.

Insight.tm
CFPB signals plan to kill payday rule

The Consumer Financial Protection Bureau said Tuesday that it plans to reopen its payday lending rule, issuing the announcement on the same day that the rule - written by the bureau's previous leadership - technically went into effect.

"The bureau intends to engage in a rulemaking process so that the bureau may reconsider the payday rule," the CFPB said in a terse, three-paragraph press release.

Although details are lacking about how the consumer agency might rewrite or kill the rule, the latest move is another illustration of the sea change since former CFPB Director Richard Cordray stepped down in November and was succeeded by acting Director Mick Mulvaney, the White House budget director who had strongly criticized the bureau in the past. (Mulvaney was not quoted or mentioned in the press release.) Read more at AMERICAN BANKER
Secure Check Cashing Systems
With CFPB Reform, Trump Can Make American Finance Great Again

Overregulation: After a number of false starts, Congress is once again seriously looking at reforming the Consumer Financial Protection Bureau. But this time, something's different: Some Senate Democrats may want to help. It's an opportunity too good to waste.

The New York Times reports that a new push to change the CFPB would be the "first major revision of the 2010 Dodd-Frank Act , a signature accomplishment of President Barack Obama that has been deemed 'a disaster' by President Trump." Read more at NASDAQ
O_Keefe _ O_Malley
AFSPA
ALTERNATIVE FINANCIAL SERVICE PROVIDERS ASSOCIATION 
AFSPA helps our members grow their Alternative Financial Services business by providing them with the best information, research, data, support, relationships and by vetting and presenting the best available product and service providers for the Alternative Financial Services Industry. 

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