Under new leadership, the Consumer Financial Protection Bureau (CFPB) recently announced plans to reconsider the payday rule, which opens the door to repealing the burdensome regulation outright. A full repeal would be a massive win for American consumers.
As it stands now, the payday lending process is smooth and transparent. Borrowers generally understand the terms of their loan agreement, and they can obtain much-needed credit efficiently without being slowed by government red tape.
But the CFPB's payday rule would tie up payday lending by imposing excessive standards to slow down the transaction process. The mandate would require payday lenders to verify a borrower's income, major financial obligations, and borrowing history before issuing a short-term loan. The agency has already issued a long list of so-called affordability criteria to lengthen the payday lending process and, eventually, decrease the number of transactions taking place.
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