Acting Deputy Director David Silberman appeared before the House Committee on Financial Services’ Subcommittee on Financial Institutions and Consumer Credit this week to testify concern payday lending. Silberman, who also serves as the Associate Director of Research, Markets and Regulations for the CFPB, provided a lengthy history to the subcommittee regarding the status of the CFPB regulation of payday lending. The majority of Silberman’s prepared remarks recounted the CFPB research, field hearings, and concerns with payday lending. Silberman’s comments indicated there had been no softening of the CFPB’s stance concerning payday lending since it issued its proposal to end “payday debt traps” in April of last year. It did, however, confirm that the CFPB continues to meet with the stakeholders, including state policy makers and tribal governments.
Most notably, Silberman’s prepared remarks outlined the concerns which have been raised by various stakeholders. Silberman noted that consumer advocates are pushing for an across the board ability to repay standard. He also noted that industry stakeholders have raised concerns that the proposal is too restrictive, particularly as to the limitation on the number of consecutive loans. With regard to state policy makers, Silberman’s remarks indicate concerns with conflicts which may arise between current state laws and any impending CFPB rules. While not stated, it is likely that these concerns are coming from states which have statutes in place which entirely preclude the making of payday or short term loans. Finally, Silberman noted that tribal governments are concerned with the effect any regulation will have on the revenues they receive from these products. Silberman concluded his comments by noting that the next step will be the formal issuance of a proposed rule. While Silberman did not indicate a time table for doing so, the CFPB’s most recent Rulemaking Agenda suggests that a proposed rule is imminent and likely to be some time in the next thirty days.