I left the following Comments with the current Consumer Financial Protection Bureau earlier today in opposition to repeal of the Payday Loan Rule. Tomorrow is the deadline for your own Comments to be heard! The contact information is all set out in my own Comments, below.
May 14, 2019
Consumer Financial Protection Bureau
Online at: https://www.regulations.gov
Re: Payday, Vehicle Title, and Certain High-Cost Installment Loans;
Proposal to Rescind or Repeal the "Payday Loan Rule."
Docket No. CFPB-2019-0006
RIN 3170-AA80
To the Director of the Consumer Financial Protection Bureau:
- From the beginning, the Payday Loan Rule has never been what you call a "2017 Final Rule."
Throughout the Comments I am going to make, I refer to the Payday Loan Rule as the Payday Loan Rule, which is what it is. Your labeling the Payday Loan Rule a "2017 Final Rule" is misleading and unacceptable. It makes it seem that you issued the Payday Loan Rule on your watch in 2017 and you simply changed your mind about it two years later. That is not what happened.
The Payday Loan Rule was proposed on June 2, 2016. It was published in the Federal Register on July 22, 2016. It received over one million (1,000,000) Comments since then.
It was only finalized based on research and the evidence in November 2017. The CFPB was not under the control of the current federal government at that time.
2. The reason behind your proposal to repeal the Payday Loan Rule is not that the Rule eliminated payday loans; it did not. The reason behind your proposal to repeal the Rule is instead that the Rule made "payday loans" an unfair and abusive practice when the loans were extended to the consumers "without reasonably determining that consumers have the ability to repay those loans according to their terms[.]"
There is a problem with payday loans that calls for consumer protection, as you recognize yourself by stating that you are now "proposing a different approach to determining whether consumers can reasonably avoid the substantial injury that the Rule determined is caused or likely to be caused by the failure to underwrite these loans." 84 F.R. at 4253.
This proposal to rescind the Payday Loan Rule is not "a different approach" as you say at 84 F.R. page 4253. To put it another way, this is not "repeal and replace" by any stretch. This is simply "repeal."
There is no replacement for the Payday Loan Rule yet there is a need for consumer protection in this area, which you admit. I agree with your recognition of a need for consumer protection in this area. I also agree with Ms. Annie McMahon's May 3, 2019 Comment asking you "How are loans designed to trap people in debt fair to consumers?" Yet you propose no substitute protections, only repeal of the protections given by the Payday Loan Rule. This is not rational nor sufficient for making rules.
I further agree with the April 23, 2019 Comments of Ms. Katy Whitehouse that the Payday Loan Rule was the result of a compromise, containing "an essential consumer protection" on the one hand, while on the other hand "still allowing for consumers to have access to credit, including longer-term installment loans and lines of credit." She pointed out a crucial fact that you have not pointed out at all in your subject proposal to rescind the Payday Loan Rule and restore the extension of these predatory loans without any safeguards for the consumers involved in them: "Because lenders have access to borrowers' checking accounts on payday or their car titles, lenders have the ability to collect even though most borrowers do not have the means to repay." (Emphasis added.) By restricting its narrow focus to only those payday loans that are made "without reasonably determining that consumers have the ability to repay those loans according to their terms," the Payday Loan Rule struck a reasonable compromise between preserving the inherent protections in these loans of lenders' ability to collect and the new feature introduced by this Rule of offering at least some protection to borrowers who do not have the ability to repay by requiring payday lenders to inquire whether the consumers of their loans have the capacity to repay them.
Your proposed repeal of this compromise is neither rational nor narrowly tailored to any valid governmental interest in this area.
Finally, I also agree and submit once again to your renewed consideration the Comments posted by Mr. Nathan Moles on February 15, 2019, the day after your proposed rescission was published in the Federal Register. He pointed out that the source you cite for your legal authority, the Dodd-Frank Act, allows the CFPB to include "'established public policies'" in the evidence that the CFPB considers in its own rule-making in the same area. Mr. Moles suggested specifically but without limitation, the example of the Military Lending Act of 2006, and he gave you the cite for your ease of reference, 32 CFR 232.3(g)(2). Yet you have failed to mention this authority, which of course runs counter to your ambitions to rescind the Payday Loan Rule.
For all of these reasons, your proposal to rescind the Payday Loan Rule is unsupported and insupportable by any evidence. It is not authorized and it is not good public policy. To the contrary, it is your proposal that should be withdrawn in the face of all the evidence, not the Payday Loan Rule.
Thank you for your consideration.
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