In a comment letter to the Consumer Financial Protection Bureau yesterday, ABA urged the bureau to revise its payday rule to exclude traditional consumer loans offered by banks, such as “bridge” loans, demand lines of credit and loans secured by securities.
Finalized in October 2017, the rule imposes an ability-to-pay test, payment withdrawal restrictions and notice requirements on a wide swath of short-term loans, including payday loans, auto title loans, deposit advances and longer-term loans with balloon payments. The CFPB has proposed to rescind the rule’s underwriting provisions and to extend the Aug. 19, 2019, compliance date for those provisions. It has not proposed to modify, rescind, or extend the compliance date for the rule’s payment provisions.
The CFPB’s proposal does not alter the complete exemption in the rule for banks and other depository institutions that made 2,500 or fewer small-dollar loans in each of the current and previous years and for which these loans account for less than 10 percent of revenues. ABA advocated for this provision to protect banks’ flexibility to serve their customers.