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June 1, 2016 | Press Releases
Alexandria, VA – The Community Financial Services Association of America (CFSA) today released the following statement in advance of the Consumer Financial Protection Bureau’s announcement of its proposed rule for payday and other small-dollar loan products. The statement can be attributed to Dennis Shaul, Chief Executive Officer of CFSA:
“The CFPB's proposed rule presents a staggering blow to consumers as it will cut off access to credit for millions of Americans who use small-dollar loans to manage a budget shortfall or unexpected expense. It also sets a dangerous precedent for federal agencies crafting regulations impacting consumers.
“From the beginning this rule has been driven – and in some instances written – by self-proclaimed ‘consumer advocacy’ groups who have sought to eliminate payday lending. The bureau took up the advocates’ agenda, relied on non-quality research, and conducted a rulemaking process while maintaining an already hardened and biased view of payday loans and how consumers use these products.
“In the best interest of consumers, the bureau should have determined the true impact of payday loans on consumer welfare. Instead, the bureau has prescribed a rule that fits its pre-determined conclusions and will actually harm consumers’ financial well-being.
“By the bureau’s own estimates this rule will eliminate 84 percent of loan volume thereby creating financial havoc in communities across the country. Thousands of lenders, especially small businesses, will be forced to shutter their doors, lay off employees, and leave communities that already have too few options for financial services.
“The Federal Reserve reported last week that forty-six percent of Americans cannot pay for an unexpected $400 expense. What is missing in the bureau’s rule is an answer to the very important question, ‘Where will consumers go for their credit needs in the absence of regulated nonbank lenders?’
“The bureau’s rule does nothing to address the ongoing problem of illegal lenders in this market. A borrower’s experience with a payday loan depends greatly on whether they borrow from a legal, licensed lender or an illegal, unlicensed lender. The two are not equal options, and this is apparent in borrower surveys and the bureau’s own complaint data.”
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About the Community Financial Services Association of America
CFSA is the only national organization dedicated solely to promoting responsible regulation of the payday loan industry and consumer protections through CFSA’s Best Practices. As such, we are committed to working with policymakers, consumer advocates, and CFSA member companies to ensure that the payday loan is a safe and viable credit option for consumers.