WASHINGTON – The Trump administration on Wednesday announced it would revise an Obama-era payday loan regulation, unveiling a proposal to remove a loan requirement that would have made it difficult for businesses to offer loans to the high cost consumption.
As part of the move, the Consumer Financial Protection Bureau announced that it will postpone the effective date of the payday loan rule to November 19, 2020.
The rule was the first federal effort to regulate short-term loans for low-income consumers and was due to come into effect in August. The Trump administration’s proposal will now go through a new administrative process that will take several months, including a 90-day public comment period starting shortly.
The announcement follows years of lobbying by payday lenders and auto lenders to block Obama’s payday loan rule. Industries said the regulations would wipe out their business by imposing onerous requirements to pre-determine the likelihood that customers could repay the loan.
“The bureau’s proposal suggests that there was insufficient evidence and legal support for the mandatory underwriting provisions in the 2017 Final Rule,” CFPB said, explaining the reasons for the review. The bureau, he said, is also concerned that these requirements could reduce consumers’ access to credit and competition.