On March 26 the Consumer Financial Protection Bureau (CFPB)
released it's proposal that would cover "payday loans, vehicle title
loans and certain high-cost installment and open-end loans".
"Today, the Bureau is publishing an outline of the proposals under
consideration in preparation for convening a Small Business Review Panel to
gather feedback from small lenders, which is the next step in the rulemaking
process. The proposals under consideration cover both short-term and longer-
term credit products that are often marketed heavily to financially vulnerable
consumers. The CFPB recognizes consumers' need for affordable credit but
is concerned that the practices often associated with these products - such
as failure to underwrite for affordable payments, repeatedly rolling over or
refinancing loans, holding a security interest in a vehicle as collateral,
accessing the consumer's account for repayment, and performing costly
withdrawal attempts - can trap consumers in debt. These debt traps also can
leave consumers vulnerable to deposit account fees and closures, vehicle
repossession, and other financial difficulties."
"The proposals under consideration provide two different approaches to
eliminating debt traps - prevention and protection. Under the prevention
requirements, lenders would have to determine at the outset of each loan that
the consumer is not taking on unaffordable debt. Under the protection
requirements, lenders would have to comply with various restrictions
designed to ensure that consumers can affordably repay their debt. Lenders
could choose which set of requirements to follow."
A factsheet summarizing the proposals under consideration: http:
A factsheet summarizing the Small Business Review Panel process:
An outline of the proposals under consideration will be available on
March 26 at: http://files.consumerfinance.gov/f/201503_cfpb_outline-of-the-
A list of questions on which the Bureau will seek input from the
small business representatives providing feedback to the Small
Business Review Panel: http://files.consumerfinance.
This is the first public step in the CFPB's efforts to reform the markets for
these products. In addition to consulting with the Small Business Review
Panel, the Bureau will continue to seek input from a wide range of
stakeholders before continuing with the process of a rulemaking. Once the
Bureau issues its proposed regulations, the public will be invited to submit
written comments which will be carefully considered before final regulations
CFPB's CORDRAY HAS NO REAL ANSWERS, JUST A PHILOSOPHY
Director Richard Cordray defended the CFPB's decision to proceed with a
rule on payday lending during the bureau's Semi-Annual Report to Congress
Rep. Lynn Westmoreland (R-Ga.) said a lot of his constituents live paycheck
to paycheck, and he asked Cordray where consumers should go if they are
in need of a small loan.
"If you were me, what would you tell them if they came to me and said they
had an emergency and they needed to get $50 or $100 for a week or three
or four days? Where would you advise me to tell them to go to get that kind
of credit?" the congressman asked Cordray during the House Financial
In response, Cordray said, "There's any number of places, but I don't
generally stand in the shoes and try to tell consumers what to do."
Westmoreland shot back, telling Corday, "Well, you tell them what they can't
do and that's my point. I was in the building business and I've loaned people
$20 or $50 or $100 that had come to me because a child was hurt, a
transmission was out, had to turn on their electricity."
Westmoreland said the CFPB has told these individuals they do not have
enough sense to manage their own financial affairs.
"You're trying to make rules that puts out payday lenders, pawn shops,
prepaid credit cards where people can have an overdraft protection so the
card wouldn't be turned down if you're going to a drug store to buy medicine
for a child," he said.
Cordray said the CFPB is at the beginning of a rulemaking process on payday
lending and other small dollar loans.
"That will unfold and there will be a lot of public input into it," Cordray said.
"We believe people need access to credit for those purposes, exactly the
kind of things you are talking about, emergency needs, but we should not
easily tolerate that people end up rolling loans over and over and they end up
paying far more in fees than they borrowed in the first place and they're in a
House Financial Services Chairman Jeb Hensarling (R-Texas) asked Cordray
what states have inadequate protections to justify the CFPB's involvement in
"We're trying to calibrate and understand a market and gauge the potential
for consumer harm. We have been careful and thoughtful and thorough in
our approach to this," Cordray said.
Hensarling asked why the CFPB is pre-empting the current legal structure
on payday lending.
"When you say pre-empt, that's sort of a loaded term. I don't know what
pre-empt means here and we have not embarked on specific notice of
comment of rulemaking yet," Cordray said.
Cordary declined to mention specific states the CFPB thinks have inadequate
protections on payday lending. "I'm not thinking about it in that way," he said.
Operation Choke Point had serious opposition from payday
lenders BUT the shit really hit the fan when it messed with gun
"Operation Choke Point is one of the greatest threats to our nation's
economic security and free enterprise. If the President can unilaterally
decide what businesses should or should not exist, without the consent
of the people or the representatives they elect, it will have enormous
consequences for limited government and for our economy." - Former
Speaker of the U.S. House of Representatives, Newt Gingrich
Congressman Reintroduces Bill to End Operation Choke Point
Rep. Blaine Luetkemeyer, R-Mo., today reintroduced legislation to end the
Justice Department initiative known as Operation Choke Point.
“While steps have been made in the case against Operation Choke Point,
there is still a need for my legislation to be reintroduced this Congress,” he
said in a press release. The legislation, which Luetkemeyer previously
introduced last November, comes one week after the Federal Deposit
Insurance Corp. (FDIC) walked back its involvement in the program and
reversed its policies in targeting legal and legitimate industries that are
disfavored by the Obama administration.
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