Pay Day Loans Under Attack: The CFPB’s Brand New Rule Could Significantly Affect High-Cost, Short-Term Lending

Pay Day Loans Under Attack: The CFPB’s Brand New Rule Could Significantly Affect High-Cost, Short-Term Lending

the buyer Economic Protection Bureau (“CFPB” or “Bureau”) proposed a brand new guideline under its authority to supervise and control particular payday, car title, as well as other high-cost installment loans (the “Proposed Rule” or even the “Rule”). These consumer loan services and products will be in the CFPB’s crosshairs for a while, therefore the Bureau formally announced that it was considering a guideline proposition to finish exactly what it considers payday financial obligation traps straight back in March 2015. The CFPB has now taken direct aim at these lending products by proposing stringent standards that may render short-term and longer-term, high-cost installment loans unworkable for consumers and lenders alike over a year later, and with input from stakeholders and other interested parties. The CFPB’s proposal seriously threatens the continued viability of a significant sector of the lending industry at a minimum.

The Dodd-Frank Wall Street Reform and Customer Protection Act (“Dodd-Frank Act”) offers the CFPB with supervisory authority over particular big banking institutions and banking institutions.[1] The CFPB additionally wields authority that is supervisory all sizes of organizations managing mortgages, payday financing, and personal training loans, in addition to “larger individuals” within the consumer financial loans and services areas.[2] The Proposed Rule specifically pertains to pay day loans, automobile title loans, and some high-cost installment loans, and falls underneath the Bureau’s authority to issue regulations to spot and give a wide berth to unjust, misleading, and abusive acts and practices also to help other regulatory agencies utilizing the direction of non-bank financial services providers. Continue reading Pay Day Loans Under Attack: The CFPB’s Brand New Rule Could Significantly Affect High-Cost, Short-Term Lending