February 6, 2019 | Federal & CFPB Regulations
Dennis Shaul, CEO of the Community Financial Services Association of America (CFSA), today released the following statement regarding the Consumer Financial Protection Bureau’s (CFPB) Notice of Proposed Rulemaking (NRPM) on small-dollar lending:
“We are pleased by today’s announcement that the CFPB is proposing to rescind part of its 2017 final rule and to delay the compliance date. These rulemakings are good first steps, and we appreciate that the CFPB has recognized some of the critical flaws of the final rule as promulgated during former Director Richard Cordray’s tenure.
However, we are disappointed that the CFPB has, thus far, elected to maintain certain provisions of its prior final rule, which also suffer from the lack of supporting evidence and were part of the same arbitrary and capricious decision-making of the previous director. Today’s new NPRM also does not appropriately address the issues and concerns that were raised in more than one million comments during the prior rulemaking process. As such, we believe the 2017 final rule must be repealed in its entirety.
“We do hope that the CFPB will also address illegal and unlicensed lenders operating in the shadows. This failure to protect consumers leaves them vulnerable to these bad actors and their unscrupulous lending practices. Continuing to target legal and licensed state-regulated lenders through regulatory restrictions on their ability to offer short term credit options will push consumers into dangerous, harmful alternatives. We also continue to believe that the Bureau, under former Director Richard Cordray, did not conduct an adequate cost benefit analysis and has failed to achieve the goal of treating similar products in an equitable manner.
“During the previous comment period, our customers spoke out in record numbers against the rule and the negative impact it will have on their ability to access credit. More than one million comments were submitted, which the Bureau largely ignored during the Cordray era. The review of comments received was so lacking in transparency that it is impossible to know how many comments were actually read by human eyes.
“Under former Director Cordray’s leadership, the Bureau took an unbalanced approach to its rulemaking and crafted a rule based on a partisan political agenda. This flawed rulemaking process ignored customer input, disregarded the disastrous impacts on small businesses, and outright circumvented the Administrative Procedure Act, which governs the federal rulemaking process.
“We hope that under the new leadership of Director Kraninger during the upcoming comment period, the Bureau will engage in a more transparent and balanced rulemaking process that genuinely considers customer comments and industry input.”