The 47 Democratic senators accuse the CFPB of bowing to the payday lending industry in its proposal to allow lenders to grant loans regardless of the borrower’s ability to repay the loans.
And in a letter to the director of the CFPB, Kathy Kraninger, Senators raised the possibility that the agency’s decision violates federal law.
“Repealing this rule gives the payday lending industry the green light to tackle vulnerable US consumers,” the senators said in the letter.
Earlier this month, the CFPB proposed to eliminate the provision on repayment capacity of the agency’s 2017 rule governing payday loans.
This rule was issued by former director Richard Cordray, who was appointed by President Obama. When former acting office manager Mick Mulvaney, appointed by the Trump administration, took over the agency, he said the office would revise the 2017 rule. Kraninger has now proposed to eliminate the capacity requirement reimbursement.
Senators said the 2017 rule followed years of research. When the agency released the proposed revised rule, no additional research was cited, they said.
“Failure to do such research would not only imply dereliction of duty, but could also constitute a violation of the law on administrative procedures,” they said, asking Kraninger to send them any studies the agency had. conducted to justify the revised rule.
This act governs the process that federal agencies must use to issue rules.
While Democratic senators blasted the agency for this week’s decision, Comptroller of the Currency Joseph Otting hailed the decision, calling it “important and courageous.”
“The proposed rule allows lenders to re-enter the market with quality products and services that provide consumers with better regulated, priced and structured products,” he said.