March 26, 2015

NAFCU in contact with CFPB on payday issues

NAFCU attended a CFPB field hearing in Richmond, Va., Thursday on payday lending – specifically addressing CFPB's plan to gather input on a future proposed rule on this issue – and keeping its members' concerns out front.

Questions and concerns about the impact of the potential rulemaking on credit unions were raised at the hearing by NAFCU Regulatory Affairs Counsel Alexander Monterrubio. Those concerns include how CFPB rulemaking could affect credit unions' ability to make loans under NCUA's small-amount, short-term rule, or its "payday alternative loan" rule.

CFPB Director Richard Cordray, in advance of the hearing, announced the bureau is considering issuing proposed rules. The bureau also released an outline of the potential proposals along with a fact sheet.

A Small Business Review Panel, the bureau says, will gather feedback from smaller lenders on the outline; CFPB will also reach out to a "wide range" of stakeholders before moving forward.

The proposed-rule outline covers both short- and long-term credit products. Short-term loan products, including payday loans, deposit advance products and some vehicle title loans, require consumers to repay in full within 45 days; long-term products would include certain loans with an "all-in" annual percentage rate exceeding 36 percent.

NAFCU Director of Regulatory Affairs Alicia Nealon said NAFCU is closely reviewing CFPB's proposed rule outline. "NAFCU appreciates and supports CFPB taking action to help protect consumers against unscrupulous actors, but we want to make sure that any future, proposed rule does not inadvertently block credit unions from meeting their members' needs as best they can," said Nealon.