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The Consumer Financial Protection Bureau issued a final rule on small-dollar lending that rescinds the mandatory underwriting provisions of the 2017 rule but keeps its payments provisions.
The CFPB said there was insufficient legal and evidentiary bases for the 2017 rule’s mandatory underwriting provisions for determining borrowers' ability to repay small-dollar loans, including payday, auto-title, and balloon-payment loans.
The agency is proceeding with provisions barring lenders from attempting to withdraw funds from an account in which two consecutive attempts have failed unless consumers consent to further withdrawals.
In a comment letter last year on the CFPB's effort to revise the rule, ICBA called on the bureau to allow flexibility for banks to use their own reasonable underwriting guidelines and encouraged the agency to promote community banks as model small-dollar lenders.