On March 26th, the Community Financial Services Association (“CFSA”) held a press call to address the CFPB’s rulemaking process for developing payday loan regulations. CFSA Chief Executive Officer Dennis Shaul offered brief opening remarks before answering questions from the press immediately prior to a CFPB field hearing on payday loans being held in Richmond, VA.
In a statement released prior to the call, Shaul emphasized that, “CFSA welcomes the CFPB’s consideration of the payday loan industry and we are prepared to entertain reforms to payday lending that are focused on customers’ welfare and supported by real data.” Shaul called on the CFPB to develop data indicating what percentage of customers benefit from their use of payday loans and use this number as a basis for comparison against the percentage of customers that experience the “payday debt traps” as described by CFPB Director Richard Cordray. Shaul expressed concerns about the impact of any CFPB regulations that could negatively impact customers that are well-served by payday loans.
Shaul also called on the CFPB to serve as an “honest umpire” between the payday loan industry and consumer advocates. Shaul noted that the rulemaking process should not become, “a contest between those who favor and those who oppose payday loans, but what is best for customers.”
The CFPB’s outline of proposals for the upcoming Small Business Advisory Review Panel acknowledges that the CFPB’s proposals will result in lost volume, principal, and revenue for lenders and will likely drive some lenders out of the market or cause substantial consolidation among existing market participants. Shaul stated that driving choices out of the market does not serve business or customers.