June 06, 2016

Andy Arculin quoted in the Wall Street Journal and American Banker on CFPB's payday lending proposal

1 min

Venable counsel Andy Arculin was quoted in the Wall Street Journal and American Banker on June 6, 2016 and June 2 respectively on the Consumer Financial Protection Bureau’s (CFPB) recent proposal targeting payday lending. While the CFPB cannot set a rate cap on short-term, small-dollar loans, the proposal marks the agency’s first action under its authority to define unfair, deceptive or abusive acts or practices

Speaking with the Wall Street Journal, Arculin said "the practical effect of the proposal would be to redirect the payday market to different types of loans, because it's built on a borrower's inability to pay them off." He added he expected trade groups to challenge the proposal. "It's a monumental rule and it will have to survive scrutiny and challenge."

Under the CFPB's proposal, most payday lenders "will be driven into installment lending," Arculin told American Banker. "They've identified several harms, one of which is direct account access … and another is the automatic rollovers for these short-term loans and they want the market to go toward different types of installment loans."