How will the CFPB’s attempts to put an end to payday debt traps impact financial institutions and consumers?

JS: If published as outlined, these proposals would impose all too familiar ability to repay requirements, similar to those applicable to mortgage lending, on the small-dollar lending market. However, an ability to repay analysis could present new challenges for this industry segment because, as the CFPB points out in its release, the products covered by these proposals “are often marketed heavily to financially vulnerable consumers.” The safeguards being considered would apply to not only traditional payday loans, but also would apply to vehicle title loans, deposit advance products and many high-cost installment loans and open-end credit plans. This means new systems and compliance challenges for the institutions engaged in this type of lending. The impact on consumers could simply be that it will be substantially more difficult to get the kind of last resort type of credit that many rely on.