Another Great Bill Introduced for PDL Industry: H.R. 4737
Published: Wed, 03/16/16
More good news for our industry!
Law360, New York (March 15, 2016, 9:07 PM
ET) -- Rep. Mick Mulvaney, R-S.C., introduced a bill on Monday that would
prevent the Consumer Financial Protection Bureau from passing rules on
so-called payday loans for two years and allow states and federally recognized
tribes to opt out of any such regulations.
Mulvaney proposed H.R. 4737, the State and Tribal Government Sovereignty
Protection Act of 2016, to block the consumer bureau from issuing or enforcing
any rule or regulation for payday loans, vehicle title loans and similar loans
for 24 months from the enactment of the law. The proposed bill would also
require the agency to justify its rules and give states and tribal governments
a five-year waiver to avoid any payday lending regulation, with the right to
receive another waiver when it’s set to expire.
The proposal comes as the CFPB is expected to release its rule-makings for
payday lending and auto title loans within the next few months, after the
agency unveiled a proposal in March 2015
that it said would eliminate so-called debt traps and likely reshape the market
for short-term credit offered by a host of financial institutions.
“The bureau’s proposals, if implemented, would be an unwarranted infringement
of state and tribal sovereignty and a violation of fundamental federalist
principles designed to secure the liberty of the American people,” according to
the bill.
The CFPB’s proposal last year outlined the agency’s thinking on how it will
tackle payday loan regulation, with its sweeping ideas targeting auto title
loans, deposit advance products and some high-cost installment and open-end
loans.
During a Feb. 11 hearing of the House Financial Institutions and Consumer
Credit Subcommittee of the House Financial Services Committee, the panel slammed the agency’s planned rule,
which would mark the first regulation of the market by a federal entity, as an
unwarranted restriction on consumer access to loans.
The expected rule comes at a time when many tribes, especially those on remote
reservations that have few alternatives, are exploring allowing short-term,
high-interest payday lending operations on their land as a way to fund tribal
government services.
At the subcommittee hearing, Sherry Treppa, chairwoman of the Habematolel Pomo tribe of Upper Lake, California, said the
CFPB failed to consult with tribes on the rule and that the rule may disregard
many tribes’ strict frameworks for regulating their lending businesses and
protecting consumers.
According to the bill’s text, the CFPB acknowledged in its proposal that
states, tribes and municipalities have regulations for payday lending, but has
persisted with its efforts to set a federal floor for protecting consumers with
such loans. Payday loans typically carry interest rates that can run up to
several hundred percent, with loan providers often accused of subverting state
consumer protection laws.
In a recent prominent case, race car driver and businessman Scott Tucker and
lawyer Timothy Muir pled not guilty on Feb. 23 in Manhattan federal court to charges
that they ran a decadelong, $2 billion illegal payday lending operation that
charged interest rates as high as 700 percent and co-opted three Native
American tribes.
In addition to setting a 24-month moratorium on the CFPB’s regulation of payday
lending, Mulvaney's bill would oblige the agency to grant a five-year waiver to
any state or tribe that asks in writing that any CFPB regulation on payday
loans, vehicle title loans or similar loans not apply to the state or tribe.
Any state or tribe that is granted a waiver “shall have the right to renew such
waiver at the end of each five-year waiver period,” according to the bill.
The proposed bill would also amend the Consumer Financial Protection Act to
require the CFPB to consult with state, tribal and local officials on the
effect of the rule and conduct a study on the agency’s authority to preempt
state, tribal and local laws and regulations.
The CFPB would also be required to issue a public report that identifies any
state or federally recognized tribe that lacks the authority to pass its own
laws or rules similar to the agency’s rule and names any state or tribe the
agency “believes is incapable of protecting its citizens from potential
risks" connected with the loans, according to the bill.
Representatives for the CFPB were not immediately available for comment on the
bill Tuesday.
After its introduction Monday, the bill was referred to the House Committee on
Financial Services, of which Mulvaney is a member.
On Tuesday, Rep. Jeb Hensarling, the Texas Republican who chairs the committee,
pushed for a “pro-growth, pro-consumer” alternative to the Dodd-Frank Wall
Street Reform and Consumer Protection Act, the enabling statute of the CFPB.
In prepared remarks, Hensarling accused the Obama administration of “regulatory
waterboarding” through the law that is “drowning community banks and small
businesses and sinking the hopes and dreams of millions of low and middle
income Americans.”
We posted a link to the Youtube video of the Feb. 11 hearing of the House Financial Institutions and Consumer Credit Subcommittee of the House Financial Services during which the the panel slammed the CFPB agency’s planned rule, which would mark the first regulation of the market by a federal entity, as an unwarranted restriction on consumer access to loans. HERE'S THE LINK:
http://www.paydayloanuniversity.com/payday-loans-financial-services-subcommittee-destroys-cfpb-deputy-director/
The other good news for our industry is here:
http://paydayloanindustryblog.com/3545-2/
“Wasserman Schultz is joined by eight other Democrats in co-sponsoring the legislation alongside twice as many Republicans.” Finally, both sides of the aisle are working together on SOMETHING!
Folks, although none of these proposals are PERFECT, WE ARE getting important regulators and legislators to re-examine our industry and consider the dire results the elimination of our short-term credit products would have on consumers all over America!
THOUGHTS? Questions? Observations? Help? Jer@TrihouseConsulting.com 702-208-6736