In the Washington Times, Wayne Abernathy, executive vice president of the American Bankers Association and former Treasury Department Assistant Secretary, warns that the CFPB’s proposed short-term regulations “would only compound problems and choke off access to small-dollar credit.”
The Bureau’s prescription, Abernathy writes, is born from its “well-known animus to payday lending” and would create two problems:
- an “installment loan straitjacket, a bad fit for the marginally employed for whom one-time loans with one-time payments are workable but regular installment plans are a challenge”; and,
- would “impose customer examination requirements more expensive than what a lender could earn from the loan.”
Abernathy sees a parallel between the CFPB, created with good intentions but whose regulatory creep threatens services that consumers value, and kudzu, the vine introduced by the Roosevelt administration to prevent soil erosion that now engulfs the entire South.
“Much like planting kudzu in a rose garden, the unchecked spread of the consumer bureau threatens to smother when it tries to protect.” Kudzu was later declared a “Federal Noxious Weed.” Will we come to think of the CFPB in the same way?
Read the full opinion piece here.