CFPB Signals No Change In Course Is Likely On Its Short-Term Lending Proposal

On February 23, 2016, Consumer Financial Protection Bureau ("CFPB") Director Richard Cordray signaled that the Bureau's anticipated rulemaking on short-term lending is likely to closely resemble its March 2015 "Outline of Proposals Under Consideration and Alternatives Considered" for regulating the payday, or short-term lending market.

During remarks before the Credit Union National Association, Director Cordray stressed that new entrants to the banking system must "be able [to] repay their loans and still meet financial obligations, such as rent or a mortgage payment, while covering living expenses such as food, transportation, and child care."

Director Cordray affirmed that the Bureau is still considering requiring short-term lenders to make an "ability-to-repay" determination, which would involve evaluating a prospective borrower's ability to repay an obligation based on his or her income, major financial obligations, and borrowing history before making a loan.