Bipartisan legislation was introduced today in the House of Representatives that would use the Congressional Review Act to undo the Consumer Financial Protection Bureau’s payday lending rule.
“Once again we see powerful Washington elites using the guise of ‘consumer protection’ to actually harm consumers and make life harder for lower and moderate income Americans who may need a short-term loan to keep their utilities from being cut off or to keep their car on the road so they can get to work,” said Rep. Jeb Hensarling [R-Texas], chairman of the House Financial Services Committee. “Americans should be able to choose the checking account they want, the mortgage they want and the short-term loan they want and no unelected Washington bureaucrat should be able to take that away from them.”
Congress recently used the Congressional Review Act to overturn the CFPB’s proposed rule that would ban the use of mandatory arbitration clauses in most consumer lending contracts.
The CFPB issued its final rule in early October. The rule will not take effect until 2019. Under the rule, lenders would be required to determine whether a borrower could afford to fully repay a small-dollar, short-term loan before it was originated. The CFPB estimated that the number of payday loans would be curtailed by up to 55% as a result of the rule. Prior to issuing the rule, regulation of the payday lending industry was largely left to the states.
The proposed legislation is sponsored by Rep. Dennis Ross [R-Fla.], and co-sponsored by Rep. Alcee Hastings [D-Fla.], Rep. Tom Graves [R-Ga.], Rep. Henry Cueller [D-Texas], Rep. Steve Stivers [R-Ohio], and Rep. Collin Peterson [D-Minn].
“More than 1.2 million Floridians per year rely on Florida’s carefully regulated small-dollar lending industry to make ends meet,” said Rep. Ross. “The CFPB’s small dollar lending rule isn’t reasonable regulation — it’s a de facto ban on what these Floridians need. I and my colleagues in Congress cannot stand by while an unaccountable federal agency deprives our constituents of a lifeline in times of need, all while usurping state authority. Today, we are taking bipartisan action to stop this harmful bureaucratic overreach dead in its tracks.”