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1 1 (October 11, 2019)

handle is hein.crs/govbbjc0001 and id is 1 raw text is: A Congressional _____ £Research Service !~nformrng the leg slta tive debate since 1914 CFPB Proposes New Payday Lending Rule, Reversing Recently Finalized Regulation Updated October 11, 2019 On February 6, 2019, the Bureau of Consumer Financial Protection (CFPB) released a new Notice of Proposed Rulemaking for Payday, Vehicle Title, and Certain High-Cost Installment Loans. The proposal would rescind a significant part of a 2017 final rule that requires small-dollar, short-term lenders to determine a consumer's ability to repay before issuing a new loan. This new, controversial proposal has received congressional support and opposition. This Insight begins with an overview of payday loans and then briefly summarizes the 2017 final rule and major changes proposed by the CFPB now. It also reviews the data and analysis supporting these rules, and the different conclusions each version of the rule reached using this same evidence. Although the CFPB's rule covers other small-dollar markets (e.g., auto title loans and other installment loans), this Insight focuses on payday loans, currently the largest market covered by the rule. For general information on the payday loan market, see CRS Report R44868, Short-Term, Small-Dollar Lending: Policy Issues and Implications. Payday Loans Overview Payday loans are designed to be short-term advances that allow consumers to access cash before they receive a paycheck. These loans are generally paid back on a consumer's next payday. Payday loans are offered through storefront locations or online for a set fee. The underwriting of these loans is minimal, with consumers required to provide little more than a paystub and checking account information to take out a loan. Rather than pay off the loan entirely when it is due, many consumers roll over or renew these loans. Sequences of continuous roll overs may result in consumers being in debt for an extended period of time. Because consumers generally pay a fee for each new loan, payday loans can be expensive. In this market, policy disagreements exist around balancing access to credit with consumer protection. Currently 17 states and DC either ban or limit the interest rates on these loans. The Dodd-Frank Wall Street Reform and Consumer Protection Act gave the federal government-the CFPB-the power to regulate payday loans for the first time. Congressional Research Service https://crsreports.congress.gov IN11059 CRS INSIGHT Prepared for Members and Committees of Congress

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