CUNA’s initial analysis of the Consumer Financial Protection Bureau’s (CFPB) small-dollar proposed rule found some important reforms to predatory lending, but consumer-friendly credit union products appear to be swept in as well. CFPB Director Richard Corday praised the credit union lending model during the bureau’s field hearing Thursday, and has told CUNA to inform the bureau about credit union products that are affected by the rule.
The CFPB’s proposal adds restrictions on payday, title, and high-cost installment loans that meet certain requirements.
CUNA will work closely with the CFPB to highlight parts of the proposal that could add to credit unions’ regulatory burden. Several CUNA-requested changes were made from the versions of the proposal released in March 2015 via the Small Business Regulatory Enforcement Fairness Act.
The NCUA’s Payday Alternative Loan (PAL) program is mentioned a number of times in the rule. It is a short-term, small-dollar product with interest limited to 28% and application fees capped at $20.
Early analysis of the rule’s treatment of PALs shows:
A few other early concerns that have jumped out at CUNA include:
For a deeper look into CUNA’s early analysis of the rule, see CUNA’s Removing Barriers blog.