The proposed rule takes the right general approach by establishing an ability-to-repay principle – including consideration of income and expenses – at its core. This is extremely significant; while a long-standing tenet of responsible lending, it is one ignored by these abusive industries driven by unaffordable loans. It is a particularly important standard for high-cost loans where lenders have the right to seize a borrower’s bank account or car. At the same time, the proposal as drafted contains significant loopholes that abusive lenders can exploit to continue to prey on vulnerable people.
June 6, 2016
Policy & Legislation