Newsroom

The comment deadline for CFPB's payday lending proposal has been pushed from Sept. 14 to Oct. 7.

The 1,300-page payday lending proposal includes a NAFCU-sought carve-out for loans issued under NCUA's payday alternative loan (PAL) program.

NAFCU President and CEO Dan Berger has said the association appreciates CFPB's consideration of PALs but also noted some major concerns remained. 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.

NAFCU is preparing a Regulatory Alert seeking members' input on the CFPB proposed rule.

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.

NCUA, through its PAL initiative, authorizes credit unions to provide short-term, small amount loans for which interest rates are capped at 28 percent and application fees do not exceed $20. There may be no more than three PAL loans to the member over a rolling six-month period.

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.

CFPB is also requesting comments on other high-risk loan products and practices not covered by the proposal; the deadline for those comments is Nov. 7.