NCUA Board to Consider Final Rule on Payday Alternative Loan Option on Sept. 19

The NCUA board will consider its long-awaited final rule governing a new option under the Payday Alternative Loan model at its meeting on Sept. 19.

Board Chairman Rodney Hood had made a commitment to considering the rule before the end of the year.

Last year, the board sought comment on a new option under the PAL program, saying that credit unions said they could not afford to offer the loans under the current PAL program.

Under NCUA policy, details about the final rule will not be released until the board meeting.

Last year’s proposal increased the maximum loan amount to $2,000, increased the maximum loan term to 12 months, required no minimum length of membership to obtain loans and eliminated the provision that allows a federal credit union to make only three loans to a member in a six-month period.

However, some credit union officials said they still would not offer short-term loans and some consumer advocates said the loan terms would still be too onerous.

The CFPB had provided programs using the PAL model a safe harbor from its payday loan rule. However, that rule has been delayed as part of an agreement between the agency and payday lenders as part of a lawsuit in Texas federal court challenging the rule.

The CFPB is expected to weaken the strict payday loan rule, which was adopted under former Director Richard Cordray, who was appointed by President Obama.

Also, at next week’s meeting, the board will receive an update on the Share Insurance Fund and will consider final rules governing supervisory committee audits and credit union bylaws.