July 7, 2020 / 4:19 PM / a month ago

U.S. consumer watchdog removes 'ability-to-pay' need from final payday loan rule

WASHINGTON, July 7 (Reuters) - The U.S. Consumer Financial Protection Bureau on Tuesday issued its long-awaited payday lending measure that rescinds an Obama-era proposal requiring lenders first ensure a borrower is able to repay them.

Consumer advocates and some lawmakers blasted the move as a further sign the Trump administration is going easy on predatory lenders.

The rule follows the agency’s 2019 proposal to seek fresh recommendations on whether to implement the so-called “ability-to-repay” provision for emergency loans, of as little as $500, that are typically repaid on the borrower’s next payday. Lenders would have been required to ensure borrowers had the means to repay a loan and meet other living expenses.

On Tuesday, the agency said “after re-evaluating the legal and evidentiary bases for these provisions and finding them to be insufficient,” it would remove the provision in its new rule. (Reporting by Katanga Johnson; Editing by Richard Chang)

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