House Democrats ask CFPB to abandon payday rule overhaul

House Financial Services Committee Chairwoman Maxine Waters and 101 House Democrats have asked the director of the Consumer Financial Protection Bureau to reconsider the agency’s overhaul of the 2017 payday rule.

Waters urged CFPB Director Kathy Kraninger in a letter Friday to allow for mandatory underwriting provisions that would be eliminated under a new proposal the CFPB issued in February.

“We think you should immediately rescind the harmful proposal to roll back the 2017 Payday rule,” Waters said in a press release. “The Consumer Bureau's proposal represents a betrayal of its statutory purpose and objectives to put consumers, rather than lenders, first. The Bureau has offered no new evidence and no rational basis to remove the ability-to-repay provisions.”

Waters and the other lawmakers also asked Kraninger to urge a Texas judge to life his stay on a separate provision in the rule — payment restrictions that limit to two consecutive attempts how often a lender can access a consumer’s checking account. In the Texas court case, a payday lender and a payday trade group are challenging the 2017 final rule.

It is unlikely Waters' letter will have an impact on the agency's decision given that Kraninger and other CFPB officials have defended their move to eliminate the underwriting provision.

The CFPB has claimed that an earlier study of payday lenders was not strong enough to justify strict underwriting requirements of small-dollar loans. The study the CFPB relied upon did not address vehicle title loans — which are covered by the rule — and was limited to data collected from one payday lender in five states.