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In opposing efforts by federal and state lawmakers to impose rate caps on small-dollar loans, industry representatives have pointed out the harm that a rate cap can create for consumers, particularly those with less than perfect credit, by reducing access to credit.  These concerns are often dismissed by consumer advocates with the argument that banks and credit unions will increase their small-dollar lending if other providers leave the market due to interest rate caps.… Continue Reading

Hawaii recently enacted significant changes to its small-dollar lending law that repeals existing Hawaii law on deferred deposits and creates a new regime for installment loans.  Although H.B. 1192 took effect on July 1, the repeal of the existing law on deferred deposits is effective January 1, 2022 as is the new licensing requirement for “installment lenders.”… Continue Reading

The CFPB has filed a motion to dismiss the federal district court lawsuit brought by the National Association for Latino Community Asset Builders (NALCAB).  That lawsuit seeks to overturn the CFPB’s July 2020 final rule (2020 Rule) rescinding the “ability-to-repay” (ATR) or “mandatory underwriting provisions” in its 2017 final payday/auto title/high-rate installment loan rule (2017 Rule). … Continue Reading

On November 5, 2020, the CFPB named Driver Loan, LLC (“Driver Loan”) and its Chief Executive Officer as defendants in a two-count complaint filed in a Florida federal district court that alleges they engaged in deceptive acts and practices in violation of the Dodd-Frank Act’s UDAAP prohibition in connection with taking deposits from and making loans to consumers.… Continue Reading

The CFPB has issued a no-action letter (NAL) to a bank to facilitate the bank’s ability to offer a small-dollar loan product.

In May 2020, the CFPB issued a No-Action Letter Template for small-dollar loan products (Template) offered by insured depository institutions or credit unions subject to the Bureau’s supervisory and enforcement jurisdiction (i.e.,… Continue Reading

In the aftermath of a statement from the CFPB and the four federal banking agencies encouraging small-dollar lending in response to the COVID-19 pandemic and guidance from the four federal banking agencies on “Interagency Lending Principles for Offering Responsible Small-Dollar Loans,” the CFPB has issued a “No-Action Letter (NAL) Template” for small-dollar loan products (SDT) offered by insured depository institutions or credit unions subject to the Bureau’s supervisory and enforcement jurisdiction (i.e.… Continue Reading

The Federal Reserve, OCC, FDIC, and NCUA have issued “Interagency Lending Principles for Offering Responsible Small-Dollar Loans.”  The agencies state that the principles are intended “to encourage supervised banks, savings associations, and credit unions to offer responsible small-dollar loans to customers for consumer and small business purposes.”

The issuance of the guidance follows the release of a statement by the CFPB and the four federal banking agencies on March 26 that encouraged small-dollar lending in response to the COVID-19 pandemic. … Continue Reading

The CFPB, OCC, FDIC, Federal Reserve, and NCUA have issued a joint statement “to specifically encourage” banks, savings associations, and credit unions “to offer responsible small-dollar loans to both consumers and small businesses” in response to the COVID-19 outbreak.  The statement builds on the March 19 statement issued jointly by the OCC, FDIC, and Federal Reserve on Community Reinvestment Act (CRA) consideration for activities in response to the outbreak.  … Continue Reading

This week, two House Financial Services Subcommittees will hold hearings.

Tomorrow afternoon at 2:00PM ET, the Consumer Protection and Financial Institutions Subcommittee will convene a hearing entitled, “Ending the Debt Traps in the Payday and Small Dollar Credit Industry.”

On Wednesday, May 1 at 10:00AM ET, the Oversight and Investigations subcommittee will convene a hearing entitled, “Examining Discrimination in the Automobile Lending and Insurance Industries.”… Continue Reading

Comptroller of the Currency Joseph Otting issued a statement today in support of the CFPB’s proposal that would rescind in their entirety the ability-to-repay (ATR) provisions in its final payday/auto title/high-rate installment loan rule.  (The CFPB has also proposed to delay the mandatory compliance date for the ATR provisions until November 19, 2020 but took no action to change the rule’s payment provisions or the August 19, 2019 compliance date for the payment provisions.)… Continue Reading