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ARTICLE · 08 JUNE 2016

CFPB Releases Expansive Payday Lending Rule

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The Consumer Financial Protection Bureau (CFPB) released its much anticipated proposed rule aimed at ending what it calls "payday lending debt cycles."

United StatesFinance and Banking
Anthony Sharett
Anthony Sharett
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The Consumer Financial Protection Bureau (CFPB) released its much anticipated proposed rule aimed at ending what it calls "payday lending debt cycles." The 1,334-page rule will require small-dollar lenders to undertake comprehensive steps to ensure that the consumer has the ability to repay the short-term or high-cost installment loan. This proposed rule would be the first set of federally promulgated rules aimed at short-term lenders.

According to CFPB Director Richard Cordray, "the Consumer Bureau is proposing strong protections aimed at ending payday debt traps. Too many borrowers seeking a short-term cash fix are saddled with loans they cannot afford and sink into long-term debt. It's much like getting into a taxi just to ride across town and finding yourself stuck in a ruinously expensive cross-country journey. By putting in place mainstream, commonsense lending standards, our proposal would prevent lenders from succeeding by setting up borrowers to fail."

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