CFSA has been urging industry stakeholders to submit a comment letter to the CFPB regarding the  “CFPB Rule Proposal to Reconsider the 2017 Payday Lending Rule.”  

Again, right now the CFPB ATR and Payment Provisions are on hold which is referred to as a “stay.” 

See below for what CFSA is saying we need to do, go for it!

Submit Your Comment by May 15

 The CFPB has issued a “Payday Reconsideration” Notice of Proposed Rule Marking and “NPRM,” which seeks comment on whether it should rescind the mandatory underwriting provisions of its 2017 Final Rule. The Payday Reconsideration NPRM has a deadline of May 15 to receive public comments.

At this time, we ask CFSA members to submit comment letters during this rulemaking comment period.
 
To assist our members, and to better ensure a consistent message, CFSA offers a detailed outline with sample themes and messaging that can be used to draft a company (or individual) comment letter.  Here is the link:

https://gallery.mailchimp.com/24e3495ba138af4c830a9e396/files/20d6e1e1-ae11-470f-a3d7-9f9b880d351e/20190325_CFPBNPRM2019_NPRMPaydayReconsideration_CompanyComment_ShortOutline.pdf

Once you have a comment prepared, here’s some information on how to submit it to the government:

Your comment must be received by the government on or before Wednesday, May 15, 2019, at 11:59 pm eastern time. 
 

Be sure to identify the Docket No. CFPB–2019–0006 at the beginning of your company’s comment letter. 
 

You can file your comment letter one of three ways:

Electronic Submission via Regulations.gov at:

https://www.regulations.gov/document?D=CFPB-2019-0006-0001

Email to:

2019-NPRM-PaydayReconsideration@cfpb.gov
 

Mail/Hand Delivery/Courier to Address:
Comment Intake
Bureau of Consumer Financial Protection 
1700 G Street, NW 
Washington, DC 20552

This blog post was written by Michael Brown, President of CAB Consulting and the Texas Organization of Financial Service Centers.  He can be reached at 214-293-8676, or Michael@CreditAccessBusiness.com.

Chris Talgo, a columnist at Townhall.com did a phenomenal job on his recent column regarding Bernie Sanders and AOC’s Loan Shark Prevention Act.  I would say he slam dunked the pair’s “Act” quite nicely.  Within the piece, several hard-hitting facts & statistics were used to counter many assertions made by the two in their recent video roll out of the Act.  

Bernie was quoted as saying “Under the legislation we are introducing today, we would establish a national usury rate to make sure that no bank or store in America could charge an interest rate higher than 15 percent.”   36% would be a killer for the payday industry, 15% would take down the credit card business and many banks.  Socialists… 

Chris Talgo wrote that “it is true that some creditors, such as payday lenders, charge high interest rates. However, these moneylenders are simply filling a niche (and desired) role in the market. For those who have a history of not repaying loans (high-risk borrowers), payday lenders are willing to provide credit. In turn, because it is very likely a large number of these high-risk borrowers will not repay their loans, payday lenders charge more interest to mitigate the increased risk they assume. In other words, there’s a good reason why payday lenders charge higher rates, and it’s not because they are greedy.”  

A 2016 CFSA report was cited that found “Over nine in ten borrowers agree that payday loans can be a sensible decision when consumers are faced with unexpected expenses. … Nearly all borrowers (96%) say the payday loans they have taken out have been useful to them personally, with two-thirds (66%) saying they have been very useful. … Moreover, borrowers are likely to recommend payday loans to friends and family (75%) and support allowing other regulated lenders to offer payday loans (78%).”

Here is another finding that Mr. Talgo shared: According to the Fordham Journal of Corporate & Financial Law, payday lenders have an average profit margin of 3.57 percent. To put this in perspective, the average profit margin is 7.9 percent for all U.S. companies.”

Mr. Talgo pointed out that “aside from the fact they are woefully wrong on the merits of moneylending, Sanders and Ocasio-Cortez’s bill would do irreparable damage to the borrowing prospects of those with poor credit scores, the very constituency they are supposedly trying to help. Ample research shows payday lenders (and other so-called “usury institutions,” as defined by Sanders and AOC) have increased household welfare.”  

Another hard hitting fact in the column was that “According to a report by the New York Federal Reserve, “in states with higher payday loan limits, less educated households and households with uncertain income are less likely to be denied credit, but are not more likely to miss a debt payment.”

And to add to the slam dunk fest, it was stated that a study titled “Restrictions on Credit: A Public Policy Analysis of Payday Lending,” found “no empirical evidence that payday lending leads to more bankruptcy filings, which casts doubt on the debt trap argument against payday lending.”

Great job Chris Talgo and thank you for taking up the argument with rock solid numbers.  Here is a link to the column:

https://townhall.com/columnists/christalgo/2019/05/15/aoc-and-bernie-jump-the-shark-with-loan-shark-prevention-act-n2546379

This blog post was written by Michael Brown, President of CAB Consulting and the Texas Organization of Financial Service Centers.  He can be reached at 214-293-8676, or Michael@CreditAccessBusiness.com.