It is possible that there will be a better outlook for the short term loan industry in 2018 because the Republicans are now doing their best to fight against the CFPB’s new rule. The Republican senators have recently written to Mick Mulvaney, who is the acting director of CFPB. Mick Mulvaney was placed by President Trump to serve as the acting director for CFPB.
In the letter, it says that they will support any legislative effort to throw down any new rule that the CFPB impose. The letter to Mulvaney shows that the Republican senators have done the right thing in standing up for the consumers and payday loan shops and other short term lenders that have been mistreated under the proposal of the new CFPB rule.
The payday rule will not be implemented until the middle of 2019. The rule requires lenders to make sure the borrowers have the abilities to pay off the loan. The rule also restricts payday lenders to extend no more than 3 loans to each lender. The rule was issued under Richard Cordray who resigned last month in November.
They decide to stand up against the rule when many people start to criticize the CFPB. They are overthrowing the rule for many good reasons. Payday loans have helped millions of Americans to meet their emergency expenses every year. Many people prefer to take out payday loans rather than applying the loan from a bank because they get approved faster.
Payday loans can get approved fast in 1 – 2 business day and provide the money they need to stay out of dire financial situations. However, the CFPB is coming up with excuses to eliminate the industry. If they successfully roll out the new rule, more than 80% of the payday loan shops will become unprofitable and ultimately close down.
Without the help from payday loan, they may resort to other alternatives, for example, taking out a loan from unlicensed predatory lender that will use violence to chase them to make payment. The CFPB did not give any clear justification on why it proposes the rule. Statistics show that there is lesser than 1% consumers complaint filed to the CFPB. The CFPB fails to consider the welfare of the people when they make claims that its high interest rate has render the payday loan industry to be deceptive.
They are now looking to the Congress on rejecting the new rule proposal. The Congress has up to 60 days to give the decision and this mean the case will delayed until March or April of 2018. If the Congress’s final verdict is against the CFPB, the CFPB will lose its authorities to make new rules.