A group of Democrat Senate and House members have reintroduced the Stopping Abuse and Fraud in Electronic (SAFE) Lending Act. This legislation, which has been introduced in the last two Congresses, faces opposition from the American Financial Services Association (AFSA). The bill seeks to prohibit convenience checks and require state-licensed installment lenders to register with the Consumer Financial Protection Bureau (CFPB).
AFSA argues that the bill would harm consumers rather than help them. They contend that there is no substantial rationale provided by the co-sponsors for these changes, especially during a time when constituents may need access to credit.
"Among other things, the bill would prohibit convenience checks and require state-licensed installment lenders to register with the Consumer Financial Protection Bureau (CFPB)," AFSA stated. "The co-sponsors provide no real rationale for why they are pushing for such changes, particularly in a time when, yet again, their constituents may be most in need of access to credit."
AFSA also reiterated its stance from two years ago when similar legislation was introduced. "As we said when this bill was introduced two years ago, the vast majority of borrowers who qualify for a personal loan with a traditional installment lender have minimal issues repaying the loans given the rigorous ability to repay standards and regularly scheduled loan structure AFSA members have implemented for their customers," AFSA stated.
The association emphasized that limiting customer credit choices is counterproductive. "Installment lenders create highly successful lending relationships with tangible benefits for borrowers. Limiting customer credit choices is counterproductive," they added.
Given that this bill has failed to pass in previous Congresses and was introduced late in this session, it is unlikely to progress further. Nevertheless, AFSA will continue to monitor its status.
September 24th, 2024