Reality Check: Highly Paid Payday Industry Mouthpiece Who Opposes Reform Thinks CFPB’s Reform Efforts Are “Rushed”

RHETORIC: Highly Paid Payday Leader Thinks CPFB Shouldn’t Rush Through New Payday Lending Rule

In and American Banker op-ed, Dennis Shaul, the head of payday lending trade group Community Financial Services Association of America (CFSA) wrote, “The truth is the CFPB has quickly moved to a regulatory solution that creates more problems than it solves…Rees’ insistence that the rule should be published now overlooks the fact that a rushed issuance of the rule would short-circuit the much-needed debate about the rule’s consequences. Rees’ insistence that the rule should be published now overlooks the fact that a rushed issuance of the rule would short-circuit the much-needed debate about the rule’s consequences. Those consequences include the loss of tens of thousands of jobs and the confusion and frustration that will be felt by consumers who need these products. The CFSA has long advocated for a thoughtful and deliberate approach to the bureau’s rulemaking. We do not seek to forestall regulation but to make sure it is done correctly. The CFPB should take the time necessary to fully consider the real-life consequences of its rulemaking.” [American Banker: Dennis Shaul Op-Ed: “CFPB’s Payday Rule Poses Real Danger to Lenders,” 4/14/16]

Dennis Shaul Is the CEO of Community Financial Services Association of America (CFSA), The Payday Industry’s Special Interest Trade Group

Dennis Shaul Is The CEO of Community Financial Services Association of America. “Dennis Shaul is the chief executive officer for the Community Financial Services Association of America (CFSA). Established in 1999, CFSA is the national organization for small dollar, short-term lending, representing the majority of nonbank storefront lenders across the United States.” [Dennis Shaul Bio, American Banker]

In 2013, CFSA Paid Dennis Shaul Over Half a Million Dollars.

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[CFSA 2013 IRS Form 990]

In 2014, CFSA Paid Shaul Nearly $600,000.

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[CFSA 2014 IRS Form 990]

REALITY:  Rushed!?! — The CFPB Proposed Outline of the New Payday Lending Rule Over a Year Ago

March 26, 2015: The CFPB Outlined Proposed Rule for The Payday Lending Industry. “Today, the Bureau is publishing an outline of the proposals under consideration in preparation for convening a Small Business Review Panel to gather feedback from small lenders, which is the next step in the rulemaking process. The proposals under consideration cover both short-term and longer-term credit products that are often marketed heavily to financially vulnerable consumers. The CFPB recognizes consumers’ need for affordable credit but is concerned that the practices often associated with these products – such as failure to underwrite for affordable payments, repeatedly rolling over or refinancing loans, holding a security interest in a vehicle as collateral, accessing the consumer’s account for repayment, and performing costly withdrawal attempts – can trap consumers in debt. These debt traps also can leave consumers vulnerable to deposit account fees and closures, vehicle repossession, and other financial difficulties. [CFPB Blog Post, 3/26/15]

RHETORIC: The CFPB Rule Will Leave People Scrambling for Alternatives That Don’t Exist

Dennis Shaul, the head of payday lending trade group CFSA wrote, “The changes imposed by the looming CFPB proposal would force many operators to shut down, leaving consumers scrambling for other forms of credit that are not readily available. For those left searching for alternatives, Rees provides a very limited solution that would only benefit the least risky of borrowers. Such selectivity would not begin to serve the needs of the 19 million households that currently use short-term credit.” [American Banker: Dennis Shaul Op-Ed: “CFPB’s Payday Rule Poses Real Danger to Lenders,” 4/14/16]

REALITY: 81% Of Payday Borrowers Said They Would Simply Cut Back If Payday Loans Weren’t an Option

Pew Study: 81% Of Payday Borrowers Say They Would Cut Back On Expenses If Payday Loans Were Unavailable. “Even though most borrowers use payday loans for recurring expenses, rather than for emergencies, survey respondents indicated they would use a variety of options to deal with those needs if payday loans were no longer available. In general, borrowers are more likely to choose options—such as adjusting their budgets, delaying bills, selling or pawning personal items, or borrowing from family or friends—that do not connect them to a formal institution. Eighty-one percent of payday borrowers say they would cut back on expenses if payday loans were unavailable.” [Pew Charitable Trusts, 7/12]

REALITY: Independent, Non-Industry Funded Studies Show Majority of Payday Consumers Feel Taken Advantage of by Lenders and Nearly 75 Percent Want More Regulation

55% Of Payday Loan Consumers Feel Payday Loans Take Advantage of Borrowers. [Pew Charitable Trust: “How Borrowers Choose and Repay Payday Loans”, 2/2013]

72% Of Payday Borrowers Favor More Regulation of the Industry. [Pew Charitable Trust: “How Borrowers Choose and Repay Payday Loans”, 2/2013]

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