CFPB Continuing Payday Rulemaking Despite Likely Biden Shakeup
In the past few days, the CFPB has hired a consultant to evaluate options for the payday loan disclosure.
The CFPB is continuing the rulemaking process for its payday loan regulation, even as it appears likely that the incoming Biden Administration will scrap the controversial rule.
The bureau this week said it has hired a contractor to conduct one-on-one interviews in an effort to “evaluate and refine potential options for a bureau-designed payday loan disclosure.”
The bureau said the interviews with consumers would build on previous academic research on payday disclosures that present information clearly and effectively.
The bureau’s notice in the Federal Register stated that it is gathering information about whether the information is needed — the first step in starting the process. Comments are due Feb. 14.
The notice does not take into account the likelihood that CFPB Director Kathleen Kraninger, whose office issued the notice, will be fired shortly after President-elect Biden takes office.
It also does not take into account that the Trump Administration’s payday loan rule is likely to be scrapped.
The payday rule has been on a roller coaster ride since it was first proposed during the Obama Administration. Then-CFPB Director Richard Cordray issued a strict rule, which, among other things, required lenders to verify whether a borrower had the ability to repay the loan before the loan is disbursed.
When the Trump Administration took office, acting agency Director Mick Mulvaney and current Director Kathleen Kraninger made it clear that they considered that rule unfair. Earlier this year, Kraninger scrapped the ability-to-repay requirement.
While Biden has not indicated that the Trump payday loan rule will be scrapped, Biden has appointed staunch critics of the current rule to his transition team for the CFPB.
For instance, the team is headed by Leandra English, who served as Cordray’s deputy director.
The team also includes Bill Bynum, CEO of Hope Credit Union, who has been a critic of the loosened payday loan rule.
“It is incredibly disappointing that the agency charged with the mission of protecting consumers has chosen to favor high cost lenders over the people harmed most by their practices,” Bynum wrote to the CFPB, in commenting on the Kraninger rule. “To ensure people are not exploited by these practices, states and Congress should move to lower the cost of these loans to 36% APR or less, and states with strong laws already in place, such as Arkansas, must preserve these critical protections.”
He said the rule proposed to eliminate some of the most important consumer protections without the opportunity for them to be implemented and evaluated.
CUNA and NAFCU supported the Kraninger changes.