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In March, the CFPB introduced proposals it is considering
for rulemaking for payday and other small-dollar loans, and subsequently held a
Small Businesses Review Panel as required by the Small Business Regulatory
Enforcement Fairness Act of 1996 (SBREFA) to discuss its proposal. Three CUNA
members participated on the SBREFA panel, and CUNA sent a letter
to the CFPB in response to it.
As a follow-up, Elizabeth Eurgubian, Jared Ihrig, Andy Price,
and Leah Dempsey from CUNA and Faith Anderson from American Airlines Federal
Credit Union met with the CFPB today to discuss the CFPB’s proposals under
During the meeting, CUNA provided the CFPB with some
background information about credit unions participation in the National Credit
Union Administration (NCUA) payday-alternative loan (PAL) program. CUNA
expressed to the CFPB that it is important to credit unions that members and
others in our communities have access to credit on the best possible terms, and
we would like to see more credit unions involved in servicing the needs for
short-term, small-dollar credit. In
accordance, CUNA cautioned the CFPB that adding more requirements to NCUA’s PAL
program could have the effect of causing credit unions, of the one in seven
that do participate in this market, to reevaluate their participation – and
hinder other credit unions from entering this market.
CUNA emphasized that credit unions make very little profit
on these types of loans and have a higher default rate for PAL loans than their
typical loan, so any added roadblocks, even if they are not extremely
burdensome, could have the effect of causing credit unions not to participate.
In the meeting, CUNA urged the CFPB to consider our comments
to the NCUA in 2012 about ways to make the PAL program easier for credit unions
to participate in, rather than the alternative of making it even harder to
participate in by adding additional requirements.
CUNA also explained that some credit unions have tailored their
small-dollar loan programs to fit the needs of their members. Further, that the
NCUA PAL program provides some leeway for credit unions to consider the
different needs of their members and tailor these programs differently, and
adding stringent requirements is not necessary.
During the meeting, CUNA expressed appreciation for the
CFPB’s efforts to weed out the bad actors in this market, but expressed
concerns about where consumers would turn if the ability of credit unions to
offer PAL loans was restricted.
CUNA will continue to engage with the CFPB about this
rulemaking and will urge regulators to allow credit unions to have the ability
to increase their participation in serving members in need of short-term,
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