Charlene Crowell’s recent column (“Consumer Financial Protection Bureau should go back to protecting consumers’ finances”) suggests that the Consumer Financial Protection Bureau (CFPB)’s small-dollar lending rule was designed to protect consumers. In reality, had it been allowed to go into effect on August 19, the rule stood to leave millions of Americans without access to a valuable source of credit.
According to the Board of Governors of the Federal Reserve, nearly half of Americans could not cover an unexpected expense costing $400. Small-dollar loans are often the least expensive option for these situations, particularly compared to overdraft or bounced check fees, unregulated offshore internet loans and penalties for late bill payments.
Yet as written, the CFPB’s rule would have forced more than 80 percent of storefront small-dollar lenders out of business, leaving many Americans with no choice but to seek out dangerous or more expensive alternatives.
Throughout the rulemaking process, more than one million customers have submitted comments to the bureau opposing the initial rule and more recently supporting its reconsideration, sharing personal stories of how small-dollar loans helped in their time of need. Now, the bureau has a chance to truly listen to the Americans it serves and strike an appropriate balance between access to credit and consumer protection.
D. Lynn DeVault, chairman
Community Financial Services Association of America