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CFPB Adopts CBAI Recommendations in Final Payday Lending Rule

On October 5, 2017, the Consumer Financial Protection Bureau CFPB or Bureau) finalized its payday lending rule. While the complete analysis of the 1,700 page Final Rule continues, it does include Community Bankers Association of Illinois (CBAI) and Independent Community Bankers of America (ICBA)-advocated exemptions from the onerous full-payment test and the principal-payoff option for lenders that make 2,500 or fewer covered short-term or balloon-payment loans per year and derive no more than 10 percent of their receipts from such loans. These exemptions benefit hundreds of Illinois community banks.

Exactly one year ago, in a comment letter to the CFPB, CBAI urged the Bureau to broadly exempt community banks from their proposed payday lending rules. CBAI recommended the proposed rules be directed at the unfair and abusive practices of other lenders and not community banks. CBAI expressed concern that the rules, as proposed, would harm community bank small-dollar consumer lending and provided the Bureau with numerous recommendations to mitigate the harmful impact of the proposed rules on community banks. Read Comment Letter.

CBAI is encouraged by the Bureau’s recognition in the Final Rule that community banks treat their customers honestly and with respect. The Rule will take effect 21 months after it is published in the Federal Register. Read More.

October 10, 2017