WASHINGTON – The nation’s new consumer financial watchdog proposed Wednesday to significantly water down tough pending rules on payday and other short-term loans designed to prevent lenders from taking advantage of cash-strapped Americans.
The proposal by Kathy Kraninger, who became director of the Consumer Financial Protection Bureau in December after being nominated by President Trump, would eliminate provisions requiring lenders to determine if borrowers can repay the short-term loans.
The bureau’s proposal to revise the rules “suggests there was insufficient evidence and legal support for the mandatory underwriting provisions” proposed in 2017 under Obama nominee Richard Cordray, according to a bureau news release. They would be the first federal rules on payday loans.
The bureau also is “concerned that these provisions would reduce access to credit and competition” in states that allow payday and other short-term loans, such as those secured by a vehicle title, the release said.
Kraninger also wants to delay the rules, set to take effect in August, until November 2020. Payday loans are allowed in California and 32 other states, with the rest prohibiting them.