By Jeff Bater
A House resolution to repeal the Consumer Financial Protection Bureau’s small-dollar lending rule was introduced Dec.1 by a bipartisan group of lawmakers.
The legislation uses the Congressional Review Act to halt the bureau’s regulatory crackdown on payday lenders and prevent it from issuing similar regulations in the future.
The resolution is sponsored by Rep. Dennis Ross (R-Fla.) and cosponsored by Reps. Alcee Hastings (D-Fla.), Tom Graves (R-Ga.), Henry Cuellar (D-Texas), Steve Stivers (R-Ohio) and Collin Peterson (D-Minn.).
The CFPB cracked down on payday lenders in October. The final rule, five years in the making, requires payday lenders to determine upfront whether consumers have the ability to repay their loans. The rule also places limits on repeat loans. It goes into effect Jan. 16 — but most sections carry a compliance date of Aug. 19, 2019.
The House resolution comes a month after President Donald Trump signed a measure approved by both houses of Congress that repealed a CFPB rule that prevents financial firms from steering customer disputes into arbitration.
A spokesman for Ross said there is strong support in the Senate for the new, payday rule resolution.
But Charles Gabriel, an analyst at Capital Alpha Partners, predicted Senate passage is likely to be difficult. “No more than a one-in-three prospect,” he told Bloomberg Law.
Margins are slim in the Senate, where Republicans hold 52 seats. Senate Republicans circulated a resolution in early 2017 to roll back the CFPB’s prepaid card rule, but never brought that measure to a floor vote.
House lawmakers think the payday-rule resolution will succeed. In a statement, Ross said more than 1.2 million people in his state each year rely on Florida’s “carefully regulated small-dollar lending industry to make ends meet.”
“The CFPB’s small dollar lending rule isn’t reasonable regulation — it’s a de facto ban on what these Floridians need,” Ross added.
Hastings said 5.5 percent of Americans have used short-term loans in the past. “I myself used a short-term loan to start my law practice, because that was the only loan available to me at the time,” he added.
Hastings was among the top Democratic recipients of campaign contributions from the payday lending industry during the 2016 campaign, according to Open Secrets. Most industry campaign cash goes to Republicans, but Cuellar, a Texas Democrat, was also a top recipient.
Daniel Press, a policy analyst at the Competitive Enterprise Institute, praised House lawmakers for showing leadership. “If implemented, the rule would leave millions of Americans in a real bind at exactly the time they need a fast loan to cover an urgent expense,” he said in a statement.
The Consumer Financial Services Association of America, an industry group for the short-term lenders, is currently exploring its legal options with regard to the CFPB’s small-dollar rule. “We anticipate having more to say in the coming weeks,” the group said in an email.
To contact the reporter on this story: Jeff Bater in Washington at firstname.lastname@example.org
To contact the editor responsible for this story: Michael Ferullo at email@example.com
Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)