Newsroom

August 26, 2016

SBA to host payday lending roundtable Sept. 14

The Small Business Administration will host a payday lending roundtable discussion on Sept. 14 in Kentucky, which will provide a recap of CFPB's Small Business Regulatory Enforcement Fairness Act panel on payday lending and note the impact of the rulemaking on small entities.

The roundtable is hosted specifically by SBA's Office of Advocacy, which recommends entities to serve on SBREFA panels and ensures that rulemakings will not be too onerous on small businesses. The roundtable will also touch on the impact of CFPB's proposal on rural communities.

The bureau's 1,300-page payday lending proposal includes a NAFCU-sought carve-out for loans issued under NCUA's payday alternative loan (PAL) program, but the association still has concerns about the proposal. One concern in particular is the proposal's potential effect on credit unions' ability to exercise statutory liens as defined by the Federal Credit Union Act.

The bureau's proposed payday rule would prescribe a "full-payment test" to covered loans. Generally, it would require that a lender determine the consumer will be able to repay a loan up front without having to reborrow. This would not apply, however, to loans that generally meet the parameters of the PAL loan authorized by NCUA. This carve-out would apply for all lenders, not just credit unions.

NAFCU continues to press CFPB to use its Dodd-Frank Act exemption authority more effectively to provide credit unions regulatory relief. It has also urged CFPB to include an express exemption for credit unions conducting short-term, small-amount loans in accordance with current state or federal laws, such as the PAL program.

NAFCU was the only financial services trade association to oppose subjecting credit unions to CFPB authority under Dodd-Frank.

Credit unions can comment on CFPB's proposal through NAFCU's Regulatory Alert; comments are due to NAFCU Friday.