In a shot across the bow that hints at a battle between the states and the Consumer Financial Protection Bureau, several Republicans and other lawmakers have said the bureau should not try to short circuit state laws with a pending proposal centered on payday loans.
American Banker reported that the intimations of a dustup came as several Republicans, speaking at a hearing for the House Financial Services subcommittee last week, said that the states have a good handle on regulating those loans.
At that hearing, not so delicately titled “The CFPB’s Assault on Access to Credit and Trampling of State and Tribal Sovereignty,” featured David Silberman, a top-ranking CFPB official, who was noted by American Banker as “repeatedly” denying that states’ rights were a target, saying that the agency was merely looking to set a “floor” of regulation. In the meantime, the agency has yet to implement the proposal, with only an outline issued last year. The outline stated that there should be a “cooling-off” period of as many as 60 days before a payday loan customer could get another such loan. Some states do indeed have cooling-off periods, but as in South Carolina, those periods are less than 60 days.
“Clearly, the CFPB does have an opinion as to whether we were right or wrong,” said Rep. Mick Mulvaney (R-SC). He noted that South Carolina “put a two-day cooling-off period in our law in 2013 … Would you still consider a 60-day cooling-off period to act as a ‘floor’ in South Carolina?”
In his testimony, Silberman said: “We did indicate from our research, which is confirmed by our experiences, that there are 30–35 percent of the people for whom this works exactly as intended,” the executive noted. “It’s the other two-thirds who don’t have the ability to repay for whom we want to create a market in which there are options for them; so they don’t have to take out the loan and then, two weeks later, find they have to take out another loan because they don’t have the money to repay the first loan.”