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

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

On June 2, 2016, the customer Financial Protection Bureau (“CFPB” or “Bureau”) proposed a brand new guideline under its authority to supervise and control specific payday, car name, along with other high-cost installment loans (the “Proposed Rule” or even the “Rule”). These consumer loan items will be in the CFPB’s crosshairs for some time, as well as the Bureau formally announced it considers payday debt traps back in March 2015 that it was considering a rule proposal to end what. 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. At least, the CFPB’s proposition really threatens the continued viability of an important sector associated with the financing industry.

The Dodd-Frank Wall Street Reform and customer Protection Act (“Dodd-Frank Act”) offers the CFPB with supervisory authority over specific big banking institutions and banking institutions.[1] The CFPB additionally wields supervisory authority over all sizes of organizations managing mortgages, payday financing, and private training loans, in addition to “larger individuals” into the customer financial loans and services markets.[2] The Proposed Rule particularly pertains to payday loans, car name loans, and some high-cost installment loans, and falls underneath the Bureau’s authority to issue regulations to determine and avoid unjust, misleading, and abusive functions and techniques also to assist other regulatory agencies aided by the direction of non-bank monetary solutions providers. Continue reading