Today The Consumer Financial Protection Bureau said that it will propose changes in January to the underwriting provisions of the agency’s rules for payday lenders AKA predatory lenders as well as to when those rules take effect.
Joseph Lynyak III is a partner at the international law firm Dorsey & Whitney and one of the nation’s foremost experts in the county on Dodd-Frank, regulatory reform, and the CFPB. His practice includes providing financial intermediaries advice in the areas of regulatory and strategic planning, application and licensing, legislative strategy, commercial and consumer lending, examination, supervision and enforcement, and general corporate matters. Of the news today he says,
“The CFPB’s announcement addresses one of the fundamental flaws in the payday rule—with few exceptions, payday borrowers have extremely poor credit profiles—meaning that imposing an ability to repay requirement is oftentimes a fool’s errand. From a personal responsibility perspective, in many cases obtaining a payday loan is an individual decision to prevent an immediate disaster from occurring, but with knowledge that a difficult predatory lenders repayment obligation is a more acceptable risk,” Lynyak says.Mohnish Pabrai On Waiting For The Perfect Pitch