Florida lawmakers are asking the Consumer Financial Protection Bureau to base its rules for payday lenders on “complete data” and “sound science.”
A letter, signed by 26 House Representatives from the Sunshine State, urges CFPB Director Richard Cordray to offer a third set of rules modeled after Florida’s regulations for short-term lenders to follow.
Last month, the agency released its proposed framework mapping out two sets of rules — debt trap prevention and debt trap protection — for lenders to choose from.
Under the prevention rules, lenders would have to verify a consumer’s income, debt and borrowing history when determining his or her ability to repay a loan in full and still cover their basic living expenses and loan payments.
Though lenders would not have to determine borrowers’s ability to repay if they were to choose the protection rules, the CFPB is considering forcing lenders to structure the loans so borrowers can pay down the principal when a loan rolls over.
The protection rules would
also limit all loans to $500, include a mandatory 60-day cooling off period for three consecutive loans and cap how long a consumer can be in debt in a 12-month period at 90 days.
Florida lawmakers, however, said they have a problem with what they call a “one size fits all” policy.
“While we strongly support meaningful and robust safeguards to prevent predatory lending practices in this market, we have continually insisted that any regulatory framework established be carefully balanced with the need to provide consumers with access to a range of financial services,” the letter said.
According to the lawmakers, Florida lenders have undertaken radical reforms on their own including offering extended repayments plans.
“To ignore our experience, which has proven to encourage lending practices that are fair and transparent without restricting credit options, would do an immeasurable disservice to our constituents, many of whom rely on the availability of short-term and small dollar loans from regulated, licensed non-bank lenders to make ends meet,” they wrote.
Category: Payday loans