The Independent Community Bankers of America and the Credit Union National Association have sent a letter to Director Cordray “to express serious concerns” about the CFPB’s proposed rule covering single-payment payday and auto title loans, deposit advance products, and certain high-rate installment and open-end loans.

ICBA and CUNA state that the proposal “if finalized in its current form, would unquestionably disrupt lending by credit unions and community banks.”  The trade groups indicate that they believe the proposal’s “extremely complex and prescriptive nature” and its resulting compliance burdens will lead community banks and credit unions “to curtail or eliminate existing products and remove incentives to innovate or develop new consumer-friendly, short-term products and small dollar loans.”  According to the groups, the proposal’s requirements, including its exceptions to an ability to repay analysis, are “inconsistent with how credit unions and community banks that know their members and customers underwrite a loan for a relatively small amount of money.”

ICBA and CUNA indicate that  the proposal’s exceptions need to be broader for community banks and credit unions to remain in the small dollar loan market.  The groups state that they plan to submit detailed comment letters outlining their specific concerns about how the proposal will limit credit availability from community banks and credit unions.