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CFPB payday loan proposal for rulemaking is coming, but timing of its publication remains unclear

Posted in CFPB General, CFPB Rulemaking, Payday Lending

At the Practicing Law Institute’s 19th Annual Consumer Financial Services Institute held on Monday in New York City, Meredith Fuchs, Associate Director & General Counsel for the CFPB delivered the opening keynote address, which touched on a number of topics regarding current areas of interest of the CFPB and provided updates on where several of such initiatives are heading. HMDA, prepaid cards, debt collection and privacy notice regulatory streamlining were areas which Associate Director Fuchs singled out as likely areas for future rulemaking. In response to questions from Alan Kaplinsky (who once again co-chaired the Institute) and others, Ms. Fuchs agreed that payday lending/small dollar, short term loan regulation was also on the list of focus areas. 

When asked to comment on when the industry could expect to see a Notice of Proposed Rulemaking for payday lending/small dollar, short term loans (“payday loans”), Associate Director Fuchs responded that she could not speak to the timing of or provide any exact time for publication of any such proposed rule. Similarly, Charles Honig, a Managing Counsel of the Office of Regulations in the Research, Markets, and Regulations Division of the CFPB, and a panelist at the event, also declined to give a specific date for publication, but did raise some interesting points. He discussed various research findings that the agency found troubling, and indicated that the findings of their research are indicative of where the CFPB could be going with the rules. Further, he alluded to the regulatory flexibility analysis process, which in the case of CFPB as a “covered agency” may include IT being required to obtain advice and recommendations from selected small business entities relative to costs of credit issues/effects of the proposed rules. We are not aware of whether or not this analysis process has been begun for the payday loan rulemaking—the last published regulatory agenda from Fall, 2013 lists this requirement as “undetermined”, and a new regulatory agenda is due to be published in the Federal Register this month. If the regulatory flexibility analysis process has not been initiated or substantially completed as yet, and given our understanding from the panel that such a process is typically initiated several months before a Notice of Proposed Rulemaking is published for comment, this suggests at least that publication of a full Notice of Proposed Rulemaking for general public comment may also be some months away.