CFSA Statement on Upcoming Comments By President Obama on Payday loans and CFPB's Richmond, Virginia Field Hearing on New Federal Payday Regulations

WASHINGTON, March 25, 2015 /PRNewswire-USNewswire/ -- Community Financial Services Association of America (CFSA) Chief Executive Officer Dennis Shaul issued the following statement in advance of anticipated comments by President Barack Obama in Birmingham, Alabama, on the issue of payday loans, which is scheduled to coincide with the Consumer Financial Protection Bureau field hearing on federal payday loan regulations.

"The Community Financial Services Association welcomes a national discussion on how to best provide for consumers' short-term, small dollar credit needs, which will be highlighted tomorrow in comments from President Obama and a Consumer Financial Protection Bureau field hearing. Payday loans represent an important source of credit for millions of Americans who live from paycheck to paycheck. The traditional banking system alone does not adequately serve 24 million underbanked households, according to the FDIC. More than 19 million households choose to use payday loans each year for their credit needs.  

"CFSA believes that two important factors must guide any new federal payday loan regulations. First, new rules must achieve the delicate balance of preserving consumers' access to credit, while enhancing consumer protections. Second, new rules should be grounded in rigorous research, not anecdote or conjecture, to determine how any regulations might impact borrowers' financial welfare.

"The CFPB must also closely consider the potential negative impact on the many lenders who are also small businesses. These small businesses play a critical role for their employees and communities and if new rules are not thoughtfully crafted, the burden may force some to close, leaving employees without paychecks or health insurance, and denying many consumers access to credit when they need it.

"To be clear, CFSA welcomes the CFPB's consideration of the payday loan industry and we are prepared to entertain reforms to payday lending that are focused on customers' welfare and supported by real data. In addition, we strongly support the creation of a national registry of all legitimate and licensed lenders to protect against illegal, unscrupulous companies that defraud consumers. 

"Substantial regulation already exists for legitimate payday lenders in the more than 30 states where these loans are offered, including strict limits on loan amounts, fees and rollovers. All CFSA members are licensed and regulated in the states where they lend, and follow a set of mandatory Best Practices that in some cases exceed the consumer protections required by law. Consumers thrive when they have more choices, not fewer, and any new regulations must keep this in mind. This is why CFSA has been working at the state level to enable lenders to offer more credit options to consumers. We want more innovation and competition; it forces businesses to work harder and provide better products and services."

To speak with Mr. Shaul, please contact Amy Cantu at [email protected].  

About the Community Financial Services Association of America
The Community Financial Services Association of America (CFSA) is the only national organization dedicated solely to promoting responsible regulation of short-term credit products and consumer protections through CFSA's Best Practices. As such, we are committed to working with policymakers, consumer advocates, and CFSA member companies to ensure that short-term credit is a safe and viable option for consumers.

SOURCE Community Financial Services Association of America