CFPB Receives Support from Free-Market Organizations
Earlier this week, the Competitive Enterprise Institute, alongside 17 other free-market organizations, sent a letter to Kathy Kraninger, director of the Consumer Financial Protection Bureau (CFPB), urging her to follow through on the CFPB’s latest proposal to rescind the Ability-to-Repay requirements in its Small-Dollar Rule, also known as the payday rule.
The joint letter argues that the ATR requirements would destroy the small-dollar lending industry, which would only serve to harm consumers by restricting their access to short-term credit and leading them to inferior products like late bill payments or loan sharks.
“If Washington regulators take away access to legitimate credit options, that will not end consumers’ need for emergency credit,” the letter said. “Instead, a ban on small-dollar loans would drive borrowers toward worse options, such as defaulting on financial obligations like rent, or seeking out unregulated lenders and loan sharks.”
The letter also calls out the evidence underlying the CFPB’s original rule, arguing that it was “devoid of evidence justifying such a hash regulation.” It cites Ronald Mann, whose original research was used to justify the ATR requirements, who has said that the CFPB’s interpretation of his work was “inaccurate and misleading.”