It is no secret that the Consumer Financial Protection Bureau has been waging war against the payday lending industry for some time now. The smaller payday lending companies, with nowhere else to turn in order to keep their doors open, have finally had enough it seems. Several small payday lending companies have joined forces and have asked lawmakers to make the CFPB take a long, hard look at how it is evaluating and regulating the payday lending industry. The expectation is that action will finally be taken to curb the bureau a bit, and to give these legitimate business owners a shot to continue to offer essential financial services to the underbanked and unbanked people of the United States.
Seven smaller payday lending companies recently drafted and sent a letter to Senator David Vitter, from Louisiana and Representative Steve Chabot in Ohio. The letter requests that the elected officials indicated that they had reviewed the new regulations being proposed by the CFPB and that they have had nothing but difficulties in starting any type of constructive interchange with the Consumer Financial Protection Bureau. The lenders indicated that the information they have received from the CFPB, thus far, has not addressed any meaningful data that is specific to small businesses.
The letter elaborated on this subject by saying, “In fact, many of our fellow lenders believe the CFPB is trying to eliminate the payday lending industry and only conducted the Small Business Regulatory Enforcement Fairness Act (SBREFA) process to try to prevent its regulation from being overturned in court.”
The CFPB is just one of the three agencies that has to come together to form a Small Business Advocacy Panel whenever it plans to create rules that will have a substantial impact on a meaningful number of small businesses. The letter that the small payday lending companies, which included Payne’s Check Cashing Service and Thrifty Loans LLC, hinted at the frustration that the lending companies feel and revealed that the CFPB lacked insight into how the regulating authorities work to protect consumers.
The letter further elaborated by saying, “It was even more frustrating that bureau officials could not identify failings in the state regulatory framework that would prompt a federal overlay of new regulatory obligations, and that bureau officials admitted they had not even analyzed the existing state programs.”
These small businesses stated that they feel frustration with the apparent lack of appreciation that the Consumer Financial Protection Bureau has demonstrated for the business relationships that the lenders have with their customers. These are real people who have no other alternatives to utilize when they need to take out short term, small dollar loans to take care of emergency expenses. Summing things up, the letter stated, “We worry that the CFPB does not understand this critical fact: if the CFPB proposal advances, our customers will fall victim to unregulated and unlicensed lenders and inferior forms of credit.”
The lending companies that put this letter together have asked that the CFPB reconvenes the SBREFA process once it has completed doing an analysis of the existing regulations used in the industry and to measure how its proposed regulations will work with the requirements that are currently in place. The lenders have also asked for a statement to explain the potential impact on smaller lending companies, in addition to the availability of credit lines for smaller businesses.
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