Payday lenders and consumer advocates are engaged in a letter writing campaign to try to sway the Consumer Financial Protection Bureau, which is expected in the coming days to introduce federal oversight of the $38.5 billion industry, the Wall Street Journal reported today. Payday loans are used by an estimated 10 million to 12 million Americans every year, many of whom live paycheck to paycheck. The loans are typically a few hundred dollars and due in two weeks, or on the borrower’s next payday. Their annualized interest rates, which can rise to nearly 400 percent, have long troubled regulators. The CFPB rule would supplement a mishmash of state rules. It would likely require lenders to assess borrowers’ ability to repay and make it harder to roll over loans, a lucrative part of the business. The practice, where customers take out new loans to repay old ones, often leads to snowballing fees. Lenders say such requirements would wipe out the market for short-term payday loans. The CFPB received 1.41 million comments on the payday rule during the comment period between July and October 2016—by far a record for the six-year-old bureau.
