Democratic Senators Lambaste Kraninger for CFPB Payday Plan

All 47 Democratic senators are accusing the CFPB of pandering to the payday lending industry in its proposal to allow lenders to make loans regardless of a borrower’s ability to repay the loans.

And, in a letter to CFPB Director Kathy Kraninger, the senators raised the possibility that the agency’s decision violates federal law.

“Repealing this rule provides a green light to the payday lending industry to prey on vulnerable American consumers,” the senators said, in the letter.

Earlier this month, the CFPB proposed eliminating the ability-to-repay provision of the agency’s 2017 rule governing payday loans.

That rule was issued by former Director Richard Cordray, who was nominated by President Obama. When former Acting bureau Director Mick Mulvaney, a Trump Administration appointee, took over the agency, he said the bureau would review the 2017 rule. Kraninger now has proposed to eliminate the ability-to-repay requirement.

The senators said that the 2017 rule followed years of research. When the agency issued the proposed revised rule, no additional research was cited, they said.

“The absence of such research would not only imply neglect of duty but also may be a violation of the Administrative Procedures Act,” they said, in asking Kraninger to send them any studies the agency had conducted to justify the revised rule.

That law governs the process federal agencies must use in issuing rules.

While the Democratic senators blasted the agency for this week’s move, Comptroller of the Currency Joseph Otting praised the decision, calling it “important and courageous.”

“The proposed rule allows lenders to re-enter the market with quality products and services that offer consumers better regulated, priced, and structured products,” he said.