WASHINGTON (6/2/15)--Many in the credit union movement aim to provide consumers with affordable short-term loan products, CUNA told the Consumer Financial Protection Bureau (CFPB) Monday.
CUNA’s letter was sent in response to a number of proposals put forth at the CFPB’s Small Business Advisory Review Panel, which CUNA believes could have unintended consequences for credit unions.
In its letter to the CFPB, CUNA commented on the proposals regarding payday, vehicle title and similar loans that can be accompanied by predatory practices.
“Predatory lending practices have no place in the financial marketplace, and credit unions have worked to find alternative solutions for providing assistance to low-income and underserved consumers in their communities,” the letter reads. “One of the goals of the founders of the American credit union movement was to create a system of cooperative finance that provides consumers with affordable payday loan alternatives including short-term, small dollar loans on fair terms and rates.”
The CFPB is also considering adding additional conditions to the extensive requirements of the National Credit Union Administration’s payday alternative loans (PALs) program. The letter urged the CFPB to consider that any additional regulatory burdens imposed on credit unions and any additional complexities added to offering loans through this program could cause credit unions in this market to reevaluate their participation.
The bureau has stated that the proposals under consideration could lead to substantial consolidation in the short-term payday and vehicle title lending markets and is analyzing the potential for consolidation.
“CUNA encourages the CFPB during this further study to consider how credit unions may play a role in this market change, and how best to not inhibit credit unions from participating and continuing to effectively serve their members,” the letter reads. “In addition, CUNA encourages the CFPB to evaluate the frequent need that underserved low or moderate-income consumers have for the immediate access to credit.”
Three CUNA-member credit unions participated in the Small Business Advisory Review Panel held in April.