Congress will soon take up H.J.RES. 122, which would nullify, via the Congressional Review Act (CRA), the Consumer Financial Protection Bureau’s (CFPB’s) Payday, Vehicle Title, and Certain High-Cost Installment Loans, known as the payday lending rule.
Congress should use the CRA to nullify the payday lending rule because all 50 states and the District of Columbia already regulate payday loans. The CFPB rule would directly usurp states’ authority to regulate these small dollar non-bank loans. Furthermore, allowing the final rule to stand all but ensures that the CFPB will harshly regulate installment lenders in the near future. Like payday lenders, installment lenders have traditionally been state regulated, and there is no need for federal regulation of these loans.
State lawmakers desire to keep these loans state regulated to best serve their citizens, and nullifying the payday lending rule with a CRA resolution would ensure that the CFPB could not issue any similar rule. This action would preserve states’ rights to regulate small-dollar financial transactions within their borders, thus providing the best possible consumer protection for their citizens.