A coalition of seven New York state senators, four assemblymembers, one borough president, 25 councilmembers, a city agency and dozens of community groups, advocacy organizations and unions is pushing federal consumer watchdogs to create stronger rules governing payday loans — or at least not create regulations that undermine New York State’s strong barriers to predatory products.
In a letter to the Consumer Financial Protection Bureau (CFPB) sent on Friday, the group writes, “We are extremely concerned that a weak CFPB rule will play right into the hands of the payday lending industry, providing it with ammunition needed to defeat strong laws like we have in New York.”
The CFOB has received an avalanche of opinion on its proposed rules on “Payday, Vehicle Title, and Certain High-Cost Installment Loans,” issued in draft form back in July and open for public comments through last Friday. The rules would impose some restrictions on the issuance short-term, high-interest-rate loans, like forcing the lenders to evaluate borrowers’ ability to repay. But the proposed language also creates exceptions to those requirements that concern advocates.
The letter from the New York coalition calls for closing those loopholes, and asks the CFPB to “strengthen the enforceability of strong state consumer protection laws, by providing that offering, making, facilitating, servicing, or collecting loans that violate state usury or other consumer protection laws is an unfair, deceptive, and abusive act or practice (UDAAP) under federal law.” In other words, they want to preserve New York’s more aggressive rules if the federal ones turn out wimpy.
In 2012, City Limits reported that despite New York’s strict rules against payday lending, loan firms were finding ways to offer those loans in the state.