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The Consumer Financial Protection Bureau said it will delay the compliance date for the mandatory underwriting provisions until Nov. 19, 2020, more than a year after it was supposed to take effect in August.
The initiative to repeal the payday-lending rule, which began in October under then-acting Director Mick Mulvaney, is a big boon to payday lenders, who have said that the initiative would hurt their business by imposing overly strict regulations on who can access credit.
“The Bureau will evaluate the comments, weigh the evidence, and then make its decision,” Kathy Kraninger, director of the Consumer Financial Protection Bureau, said in a statement.
The rule essentially requires that payday lenders must determine, before granting a loan, whether a borrower can afford to repay it in full, with interest, within 30 days. The rules would have also capped the number of loans a person could take out in a certain period of time.
According to The Associated Press, annual interest rates on loans can exceed 300 percent in the payday lending industry.
Rich Cordray, the former CFPB director who served under President Obama, called the decision a “bad move” that will ultimately hurt the consumers.
“CFPB is proposing to unwind the core part of its payday loan rule - that the lender must reasonably assess a borrower’s ability to repay before making a loan,” he said in a tweet. “It’s a bad move that will hurt the hardest-hit consumers. It should be and will be subject to a stiff legal challenge.”
The Associated Press contributed to this report.