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Contact: Amy Saltzman, Kristin Lawton, 202.408.9788

Jun 2, 2016

Consumer Financial Protection Bureau's Proposed Payday Lending Rules are a Significant Step Toward Protecting Vulnerable Borrowers

FOR IMMEDIATE RELEASE

Consumer Financial Protection Bureau's Proposed Payday Lending Rules are a Significant Step Toward Protecting Vulnerable Borrowers

Washington, D.C. -- Statement by Andrea Levere, President of the Corporation for Enterprise Development (CFED), in response to Consumer Financial Protection Bureau payday lending proposal:

The proposed rules issued today by the Consumer Financial Protection Bureau (CFPB) to regulate small-dollar credit products--including payday, auto-title and many other high-cost installment loans--mark an important milestone towards protecting financially vulnerable consumers from the most abusive predatory lending practices.

We applaud the Bureau for thoughtfully and deliberately developing these much-needed regulations, which have the potential to significantly rein in an industry that has thrived by compromising the financial well-being of millions of low- and moderate-income consumers.

The proposed rule adds requirements for lenders to verify a borrowers' ability to repay before extending a loan to a consumer--a standard practice in nearly all other forms of lending, except the small-dollar lending industry. The rule also provides an alternative to this standard that limits loan size and prevents borrowers from rolling over the same loan multiple times. Additionally, the rules restrict lenders from having unfettered access to a borrower's bank account, which currently exacerbates the debt trap perpetuated by small-dollar lending.

We look forward to further strengthening the regulations through the public comment process and CFED's Consumers Can't Wait campaign, which has been mobilizing advocates to urge the CFPB to propose strong payday lending rules for nearly a year. In the coming months, we will work with the Assets & Opportunity Network, consisting of some 2,000 service providers, advocates, financial institutions, policymakers and others, to ensure that the final rules result in safer loan products and strong federal protections against predatory small-dollar lending practices.

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CFED's work makes it possible for millions of people to achieve financial security and contribute to an opportunity economy. We scale innovative practical solutions that empower low- and moderate-income people to build wealth. We drive responsive policy change at all levels of government. We support the efforts of community leaders across the country to advance economic opportunity for all. Established in 1979 as the Corporation for Enterprise Development, CFED works nationally and internationally through its offices in Washington, D.C.; Durham, North Carolina, and San Francisco, California.

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