CFPB proposes changes to payday rule, per CUNA request
The Consumer Financial Protection Bureau released proposed rules making changes to its short-term, small-dollar lending rule Wednesday. CUNA has called on the CFPB to revise its rule to ensure credit unions are able to continue offering short-term, small-dollar lending options for members in need, and is currently analyzing the proposal.
“Credit unions are known for providing safe and affordable short-term, small-dollar loans designed to keep members away from payday lenders and debt traps,” said CUNA Chief Advocacy Officer Ryan Donovan. “We support bureau efforts to revise this rule, and urge the bureau to ensure these changes do not inhibit credit unions participating in the short-term, small-dollar loan market.”
CUNA, in its letter sent to CFPB Director Kathy Kraninger in December, said it supports revisions to the rule that would create an express, broader exemption for credit union loan products. CUNA agrees with the bureau that payday lenders should be effectively regulated.
CUNA also called for the CFPB to work with NCUA as NCUA develops additional small-dollar loan products to coincide with the Payday Alternative Loan (PAL) program. NCUA proposed an additional PAL product in May, and CUNA has suggested additional changes to that proposal.
The CFPB issued its original short-term, small-dollar loan in June 2016 with several provisions that would have negatively impacted credit unions’ presence in the market. Following intensive advocacy from CUNA, which included a 61-page comment letter and several meetings, the bureau made substantive, CUNA-supported changes to the rule in October 2017.
CUNA is analyzing these proposed changes and will continue to engage with the CFPB to ensure credit union interests are upheld in the final rule.