CFPB Payday Loan Proposals Will Impact Depository Institutions

In June 2016, the Consumer Financial Protection Bureau ("CFPB") released its long-awaited proposed rules—all 1,334 pages of them—to regulate payday lenders, automobile title lenders and other lenders of small dollar installment credit (the "Proposed Rules").

While the bulk of the criticisms and commentary on the Proposed Rules have come from companies that are in the payday lending and auto title loan business, and that have essentially said that the Proposed Rules would put them out of business, much less attention has been paid to the adverse implications the Proposed Rules would present for depository institutions, particularly smaller banks and credit unions that still routinely offer and make small consumer loans to their customers and members.