The following comments can be attributed to D. Lynn DeVault, Board Chair of the Community Financial Services Association of America and was submitted to the American Banker as a letter to the editor today:
Your June 29 story, “Payday Loan Crackdown Could Have Big Upside for Banks,” mischaracterized developments in the regulatory environment and misinterpreted the impact of expanding access to short term lending.
As the body of the article makes clear, there is no “crackdown,” but rather routine examinations of non-bank lenders as required by Dodd-Frank.
The storefront payday lenders represented by the Community Financial Services Association welcome banks and credit unions into the payday lending market. Increased competition will drive innovation and reduce costs for the millions of consumers who need help managing unexpected and periodic financial difficulties. Our members offer a regulated mainstream financial service that competes favorably with deposit advance and overdraft protection products. What is important is that the CFPB ensures all short-term credit options are simple, fully disclosed, transparent and cost competitive.
The CFPB has been deliberate in its data-driven approach to examine industries that offer similar products. Director Cordray and members of his staff have been clear that a key objective of the CFPB will be addressing the practices of bad actors in the industry, whether they are banks or non-banks. Our members adhere to a strict set of best practices designed to protect consumers, and we welcome the CFPB’s efforts to weed out those who do not.
The reality is that one in three Americans has no savings, according to a recent study by Princeton Survey Research Associates International. Short-term credit is more necessary than ever, and our members offer a service that compares favorably to alternative loan products in price and customer experience.
Amy Cantu, Communications Director