CFPB Reopens Consideration on Small Dollar Rule

On the same day that it was officially codified in the Federal Register, the Consumer Financial Protection Bureau’s agreed to reopen consideration on its rule for “Payday, Vehicle Title, and Certain High-Cost Installment Loans,” also referred to as the Small Dollar or Payday Rule. In a press release, the agency noted that, “the Bureau intends to engage in a rulemaking process so that the Bureau may reconsider the Payday Rule.”

The Small Dollar Rule is a scaled down version of the Bureau’s original proposed rule from 2016 and mostly addresses payday and vehicle title loans. The proposed version of the rule garnered over 1 million comments from the public and the lending industry. Hoping to stem the cycles of debt that can befall payday borrowers, the CFPB’s Small Dollar Rule includes 3 key components – a full payment test, a principal payoff option, and a debit attempt cutoff. The rule also waives the full payment test and principal payoff option for less risky loans originated by credit unions and community banks if done in small volumes.

Despite the rule having limited effect on installment lenders in general, the CFPB continued its attack on tribal sovereignty through expressions of its legal authority and dismissal of concerns during the tribal consultation process. The review process announced today could be the first opportunity for new CFPB leadership to show their respect and commitment to tribal sovereignty and self-determination, instead of furthering a harmful agency policy that tramples Native rights.