Friday February 22nd, 2019 9:22AM

Consumer watchdog considering repeal of payday lending rule

By The Associated Press
Related Articles
  Contact Editor

NEW YORK (AP) — 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.

Since Obama-appointee Richard Cordray stepped down as director in November, the Trump administration has been moving quickly to clamp down on the bureau's activities. The bureau is now under the control of Mick Mulvaney, also the White House's budget director, who has called the bureau a "sick joke" in comments before he took this job. During the 2016 election cycle, when Mulvaney was still a Congressman from South Carolina running for re-election, he received $31,700 in contributions from the payday lending industry, according to data from the Center for Responsive Politics.

The payday lending rules were finalized in the last weeks of Cordray's tenure. There is a bill in front of Congress that would repeal the payday lending rules entirely as well.

A total repeal of the rules, if the CFPB decides on one, could take years to wind itself through the appropriate regulatory channels. The CFPB would have to conduct research to show the current rules are not working, put out notices for repealing the rules, and consider public and industry comments, among other steps. The bureau started building a case for its current payday lending regulations back in 2012.

A CFPB spokesman referred questions about what specifically the bureau plans to do with the payday lending rule to Mulvaney's office in the White House, which declined to comment beyond the original statement.

Dennis Shaul, CEO of the Community Financial Services Association of America, which represents the payday lending industry, said he was "pleased" that the CFPB was revisiting the regulations.


Ken Sweet covers banks and financial issues for The Associated Press. Follow him on Twitter at @kensweet.

  • Associated Categories: U.S. News, Associated Press (AP), AP National News, Top U.S. News short headlines, AP Business, AP Business - Consumer News, AP Business - Personal Finance
© Copyright 2019 AccessWDUN.com
All rights reserved. This material may not be published, broadcast, rewritten, or redistributed without permission.
The Latest: Trump asked doctor for cognitive test
President Donald Trump asked that a cognitive test be included as part of his first physical exam
4:33PM ( 4 minutes ago )
A growing number of actors are renouncing Woody Allen
Timothee Chalamet says he will donate his salary from an upcoming Woody Allen film to charities fighting sexual harassment and abuse
4:28PM ( 9 minutes ago )
North Dakota oil output cut back to meet gas capture rules
Fearing sanctions by the state, some North Dakota oil drillers have begun cutting output to control the amount of wasted natural gas
4:26PM ( 11 minutes ago )
Associated Press (AP)
Immigration deal distant as leaders try to avert shutdown
A deal between President Donald Trump and Congress to protect young immigrants from deportation remains distant
4:03PM ( 35 minutes ago )
Dow industrials recede from 26,000 as early gains fade
Losses by industrial and technology companies are helping pull U.S. stocks mostly lower in late-afternoon trading, placing the market on course for modest losses
3:44PM ( 53 minutes ago )
US travel industry launches plan to reverse tourism decline
Travel industry representatives sounded an alarm Tuesday over a long-term decline in international tourism to the U.S. and announced efforts to reverse the trend
3:33PM ( 1 hour ago )
AP Business
Italy: Modigliani art exhibit found to be full of fakes
Consumer advocates in Italy are demanding refunds after an expert ruled that almost all the paintings featured in a Genoa art exhibition devoted to Amedeo Modigliani were fakes
5:36PM ( 5 days ago )
France investigating Apple's secret slowdown of old iPhones
French authorities have opened an investigation into Apple over revelations it secretly slowed down older versions of its iPhones, the Paris prosecutor's office said Tuesday
4:13PM ( 1 week ago )
France investigates Apple for slowing down old iPhones
French authorities have opened an investigation into Apple over revelations it secretly slowed down older versions of its handsets, the Paris prosecutor's office said Tuesday
1:05PM ( 1 week ago )
AP Business - Consumer News
Future floods will be in mind as California town rebuilds
Officials say the possibility of future catastrophic floods will be in mind as Montecito, California, rebuilds following deadly mudslides that devastated the wealthy coastal hideaway
12:54PM ( 1 day ago )
Holiday gift for retailers; sales up a solid 0.4 percent
US retail sales rose 0.4 percent in December, closing out strong holiday shopping season
11:30AM ( 4 days ago )
Walmart boosts starting pay, closing dozens of Sam's Clubs
Walmart to boost starting salary for US workers, but also closing dozens of Sam's Clubs nationwide
7:23PM ( 4 days ago )
AP Business - Personal Finance
North Dakota oil output cut back to meet gas capture rules
Fearing sanctions by the state, some North Dakota oil drillers have begun cutting output to control the amount of wasted natural gas
4:26PM ( 11 minutes ago )
Mormon church appoints 93-year-old ex-surgeon as president
The Mormon church appointed a 93-year-old former heart surgeon has been officially named its new president
4:26PM ( 12 minutes ago )
Mormon leadership hierarchy is made up only of men
The selection of a new Mormon president fills a void atop a well-defined leadership hierarchy that has governed the church for decades
4:23PM ( 14 minutes ago )
The Latest: Trump doctor says he did well on cognitive exam
President Donald Trump performed "exceedingly well" on cognitive screening during his recent physical examination
4:21PM ( 16 minutes ago )
The Latest: Trump's doctor upbeat on him finishing term
President Donald Trump's doctor says he's confident that Trump has a "very strong and a very probable possibility" of completing his presidency "with no medical issues."
4:13PM ( 24 minutes ago )