January 16, 2018

CFPB to reconsider payday lending rule

The CFPB on Tuesday announced plans to revisit and reconsider its payday lending rule. Yesterday marked the effective date of the final rule, though most of the compliance deadlines do not go into effect until Aug. 19, 2019.

"At this point, it is too early to see how the CFPB is going to change the rulemaking," said NAFCU Director of Regulatory Affairs Alexander Monterrubio. "At the same time, we do encourage the CFPB to evaluate their rulemakings on an ongoing basis. We hope the CFPB focuses on the bad actors and not those who offer individuals with responsible short-term, small-dollar credit."

The final rule addresses many concerns raised by NAFCU and its members to ensure credit unions' ability to meet consumers' needs for short-term, small-dollar loans. Specifically, it exempts all loans issued by credit unions in conformance with NCUA parameters for payday-alternative loans (PAL). It also explicitly sanctions a federal credit union's statutory right of offset to collect against an outstanding balance on a covered loan.

NAFCU will keep members apprised of any changes to the rule that would apply to the credit union industry.