Dive Brief:

• House Financial Services Committee Chairwoman Maxine Waters, D-CA, and 101 House Democrats asked the Consumer Financial Protection Bureau (CFPB) in a letter Friday to reconsider its effort to remove ability-to-repay requirements from a 2017 payday loan rule.
• The lawmakers also asked CFPB Director Kathy Kraninger to urge a Texas judge to lift his stay on a part of the rule that would limit a lender's ability to repeatedly access a consumer’s checking account despite insufficient funds.
• The letter is unlikely to change the CFPB's course. Agency officials testified in May the study used in an attempt to champion stricter underwriting on small-dollar loans was not strong enough.

Dive Insight:

 "The Consumer Bureau's proposal represents a betrayal of its statutory purpose and objectives to put consumers, rather than lenders, first," the lawmakers wrote. "Moreover, the Bureau has offered no new evidence and no rational basis to remove the ability-to-repay provisions."

The letter cited an April hearing where witnesses testified on the dangers of payday lending, car-title loans and their disparate impact on lower-income populations, and particularly, people of color, service members and seniors.

"The payday loan industry is guilty of such unjust and unethical practices that prey upon the desperation of the poor who are already disadvantaged," the Rev. Frederick Douglass Haynes III, a pastor from Dallas, testified, according to the letter. "Payday predators hijack the hopes of the vulnerable and re-victimize them by baiting them into a debt trap."

Previous CFPB officials, appointed under former President Barack Obama, cited a Columbia University professor's survey asking 1,000 payday loan customers to estimate how long it would take to repay the loan. About 60% of first-time borrowers accurately predicted within two weeks when they could repay the loan, the study showed. However, that also meant 40% of borrowers could not. Obama-appointed officials said the latter figure pointed to the need for stricter underwriting in payday loans. 

Trump-appointed CFPB officials cited the same study in their move to "revisit" the underwriting standards. When two payday lenders sued to invalidate the rule, former acting CFPB Director Mick Mulvaney sided with the lenders, saying the Columbia study showed most borrowers know what they’re getting into when they take out a payday loan.