Long-Delayed CFPB Payday Plan Inches Closer

The Consumer Financial Protection Bureau (otherwise known as CFPB) is set to release details related to its proposal to regulate payday-type loans with more severity — nine months after the plan was actually disclosed, American Banker reported Tuesday (Dec. 15).

The unveiling could be the culmination of several months of delays over how and when to scrutinize the loans, which marks repeated rollbacks of deadlines and hints at what some observers said would be a “broad” proposal aimed at lenders who offer up funds regardless of the borrower’s ability to pay.

[bctt tweet=”The unveiling could be the culmination of several months of delays.”]

The choice then becomes a sticky one, threaded between defaulting, re-upping loans or missing other financial obligations. The bureau itself has been looking through information attached to payday and auto title loans, among others, to solidify the approach.

The CFPB now hints that two options are on the table: a borrower’s ability to repay the loans based on financial condition must be ascertained before offering up the funds and the elimination of letting lenders withdraw payments from accounts, which is a way to make money off of fees.

Regardless of the launch date, there is a rule-making process that must be followed across all proposals, as there is a 90-day commentary period ahead of an official debut of proposed rules in the spring. The review period means that the CFPB then has to examine those comments, which can take a long time, perhaps as long as weeks. Then, there would be the issuance of the final rule by the CFPB, which would take effect a year after the issuance of a final rule.


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