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CFPB Rule Would Harm Borrows it Promised to Help
On December 1, Representative Dennis Ross (FL-15) introduced House Joint Resolution 122, starting the Congressional Review Act (CRA) process to repeal the CFPB’s small-dollar lending rule. Consumers’ Research has raised concerns that the CFPB’s will harm the very consumers the bureau is charged with protecting.
Kyle Burgess, Consumers’ Research’s Executive Director, released the following statement on the resolution:
The small-dollar rule will decrease access to credit for America’s most financially vulnerable populations. Roughly 72 million small-dollar loans have been made to consumers over the last six years, yet the CFPB chose to base its rule on unverified complaints comprising less than one-hundredth of a percent of loans granted. Consumers’ Research applauds Representative Ross’s effort to roll back the CFPB’s well meaning, but wholly misguided small-dollar rule and encourages quick action by Speaker Paul Ryan.”
In its final rule, the CFPB admitted the impact the regulation will have on the industry and on consumers. They estimate a decrease in payday loan volumes of 62 to 68 percent with a corresponding loss of revenue. This will undeniably restrict consumers’ access to credit. The CFPB stated that the decrease in storefronts “may limit some physical access to credit for consumers, and this limit may be felt more acutely by consumers in rural areas.”
Washington, D.C., December 5 – Founded in 1929, Consumers’ Research is the nation’s oldest consumer organization that seeks to increase the knowledge and understanding of issues, policies, products, and services of concern to consumers. For more information, visit: https://consumersresearch.org/ and follow Consumers’ Research on Twitter at @ConsumersFirst.