Not surprisingly, letters sent to the CFPB this week by New York Financial Services Superintendent Benjamin Lawsky and by 12 House Republicans urge the CFPB to take very different approaches as it considers payday and short-term loan rulemaking.
In their letter, the House Republicans set forth the following five principles which they believe the CFPB should follow in adopting rules for payday and short-term loans:
- Maintain a data-driven approach in which rulemaking is based on large scale data analysis and tested research, not anecdotal or agenda-driven rhetoric
- Consider the impact on small businesses that provide access to credit through the use of their own capital and employment opportunities
- Consider the impact on rural communities which can be disproportionately impacted by overzealous regulations
- Conduct a qualitative and quantitative cost-benefit analysis
- Consider state models in states that have passed short-term lending laws
In contrast, Mr. Lawsky’s letter does not propose that the CFPB engage in a deliberative rulemaking process but instead supplies anecdotal stories and background about his agency’s “multifaceted effort to protect consumers from illegal, online payday lending” to support his call for the CFPB to craft “strong national rules.” According to Mr. Lawsky, such rules should include the following:
- A ban on the use of remotely created checks in connection with collecting on payday loans
- Restrictions on the sharing of sensitive personal information with payday lenders, payday loan lead generators and other third parties
- A rigorous ability-to-repay standard
Mr. Lawsky also wants the CFPB to make clear that its rules are minimum standards that do not preempt more restrictive state laws.