Consumer bureau to revisit payday lending regulations

The Consumer Financial Protection Bureau will revisit a crucial part of its year-old payday lending industry regulations, the agency announced Friday, a move that will likely make it more difficult for the bureau to protect consumers from potential abuses, if changed.

The CFPB finalized rules last year that would, among other changes, force payday lenders to take into account the ability of their customers to repay their loans in a timely manner, in an effort to stop a harmful industry practice where borrowers renew their loans multiple times, getting stuck in a cycle of debt. Those “ability to repay” regulations will now be revisited in January 2019, the bureau said.

The bureau took more than five years to research, propose, revise and finalize the current regulations. The payday lending rules were the last regulations put into place by President Obama’s CFPB Director Richard Cordray before he resigned late last year to run for governor of Ohio.

The cornerstone of the rules enacted last year would have required that lenders determine, before approving a loan, whether a borrower can afford to repay it in full with interest within 30 days. The rules would have also capped the number of loans a person could take out in a certain period of time.

But since President Trump appointed Acting Director Mick Mulvaney, the bureau has taken a decidedly more pro-industry direction than under his predecessor.