WASHINGTON — More than one hundred House Democrats sent a letter to Consumer Financial Protection Bureau Director Richard Cordray on Wednesday calling for the agency to strengthen its proposal to rein in payday lending.

"Though we applaud the CFPB for taking the necessary first steps to address predatory practices in the small-dollar credit market, we urge you to adopt a final rule with additional protections that will ensure responsible lending," said the letter signed by the House Democrats, including Rep. Maxine Waters, D-Calif., the ranking member of the House Financial Services Committee.

The bureau's June proposal would generally require lenders to assess borrowers on whether they can repay a loan prior to taking it out, but included an alternative that consumer groups say is a loophole in the plan.

The alternative is a "principal payoff option" that allows consumers to borrow up to $500 without passing the full-payment test, but limits the lender to only providing up to two extensions if they cannot repay the original loan in 30 days.

"The bureau's adoption of an ability-to-repay principle based on a borrower's income and expenses is critical to ensuring fairness for consumers," the letter said. "We also encourage the bureau to enact stronger protections against consumer abuses in the small-dollar industry by closing loopholes that would allow borrowers to take out multiple loans in succession or provisions that would reduce the cooling-off period."

The CFPB is forbidden by law from capping interest rates, but some states have already enacted such limits. Democrats worry that the CFPB rule will supercede those local protections.

"The final CFPB rule should strengthen and support these strong consumer protections by affirming the importance of strong state laws that protect consumers from the harm caused by triple-digit interest rates," Democrats wrote.

The CFPB proposal includes some flexibility on the payment test for longer-term installment loans, which the bureau views as "less risky," but limits the length of the loan and the all-in annual percentage rate to 36%.

Consumer advocates argue that even under the proposal would still allow lenders to be able to extend loans with triple-digit APRs while others argue the plan would essentially cut off credit to people who have the hardest time getting it.

The comment period for the CFPB payday proposal ends Oct. 7.

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