WASHINGT0N (9/9/15)--CUNA is asking credit unions that offer short-term, small-dollar loans--and those that do not--to participate in a short survey that could help inform the Consumer Financial Protection Bureau (CFPB) as it contemplates new rules for such loans.
CUNA is asking for a quick turnaround on the survey, which is aimed at clarifying and summarizing credit union short-term/payday-loan substitute loan practices.
The National Credit Union Administration (NCUA) authorized federal credit union in 2010 to make short-term/small-amount loans and to extend lines of credit to their members. These Payday Alternative Loans (PALs) provide consumers with an alternative to borrowing from potentially predatory payday lenders.
In March 2015, the CFPB released an outline of proposals under consideration covering both short-term and longer-term credit products. The bureau is contemplating two approaches to "ending debt traps" caused by predatory payday lenders; prevention and protection.
While CUNA supports aspects of the potential action that could curtail consumer abuse and provide stronger consumer protections, there are some concerns that the plan could impact both the NCUA PAL program and other similar programs offered by state-chartered credit unions.
“Your participation in this survey is critical--even if your credit union does not now offer this type of loan,” notes CUNA Senior Economist Mike Schenk.
“If your credit union does not offer these loans the survey will take less than three minutes to complete”, he says. "If your credit union offers these loans your input on some potential regulatory changes is needed. The contemplated changes might influence your credit union's ability or willingness to offer these and similar loans to members."
Here is the survey link.