The Consumer Financial Protection Bureau (CFPB) yesterday revoked rules that required lenders to ensure that potential customers could afford to pay the potentially staggering costs of short-term, high-interest payday loans, The Hill reported. The bureau yesterday released the final revision to its 2017 rule on payday loans, formally gutting an initiative with roots in the Obama administration that was aimed at protecting vulnerable consumers from inescapable debt. The initial rule, released shortly before President Trump appointed new leadership at the CFPB, effectively banned lenders from issuing a short-term loan that could not be paid off in full by a borrower within two weeks. The measure required payday lenders to determine whether the customer had the “ability to repay” the loan with an underwriting process similar to what banks use to determine whether a customer can afford a mortgage or other longer-term loan. The CFPB has now issued a new version of the regulation that scraps those underwriting requirements, in line with a proposal released in February 2019. The new regulation leaves in place the original regulation's restrictions on how frequently a payday lender can attempt to withdraw funds from a customer's bank account.
