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CFPB Payday Lending Proposal – Credit Union Feedback Needed by August 26

Missouri and Kansas credit unions are asked to share information with the Heartland Credit Union Association (HCUA) in connection with the Consumer Financial Protection Bureau’s rule for payday, vehicle title and certain high-cost installment loans. There is concern that the overly broad scope of the rule will sweep in products and services offered by credit unions that are not even similar to a payday or small dollar loan. In addition, it does add new regulatory and compliance burdens for federal and state-chartered credit unions. 

HCUA requests specific information to utilize in discussions with federal legislators and to provide a comment letter to the CFPB on behalf of member credit unions. Please provide answers to both questions 1 and 2 if your credit union has offered payday lending programs at any time. If your credit union does not/has not offered payday lending programs in the past, please respond to question 2.

  1. If your credit union offers payday lending programs or have so in the past, please provide information about your program and how it operates. What is (or was) your payday lending model? Why does it work (or if discontinued, why did it not work)? Any specific examples demonstrating how it assisted members/consumers is also helpful.
  2. The CFPB considered, but did not include, a 5 percent payment-to-income ratio in its payday proposal. However, it is still being advocated by the Pew Charitable Trusts as a viable option. There is concern within the credit union community about the potential chilling effect a 5 percent cap may have. To help us address those questions, what impact would a 5 percent cap have on the underwriting of a payday loan from your credit union’s perspective? Would this inhibit your ability to provide low-dollar loans? 

Please share your feedback on the above questions with Amy McLard by August 26. 

 Credit unions are also urged to comment on this issue to the CFPB. Comment letters are due by October 14, 2016, and may be filed via PowerComment