Consumer watchdog considering repeal of payday lending rule

FILE - In this Monday, Nov. 27, 2017, file photo, Mick Mulvaney speaks during a news conference after his first day as acting director of the Consumer Financial Protection Bureau in Washington. The CFPB is reconsidering a key set of rules enacted in 2017 that would have protected consumers against harmful payday lenders. The bureau, now under Trump administration control, says it plans to take a second look at rules put in place last year under an Obama appointee. (AP Photo/Jacquelyn Martin, File)
FILE - In this Monday, Nov. 27, 2017, file photo, Mick Mulvaney speaks during a news conference after his first day as acting director of the Consumer Financial Protection Bureau in Washington. The CFPB is reconsidering a key set of rules enacted in 2017 that would have protected consumers against harmful payday lenders. The bureau, now under Trump administration control, says it plans to take a second look at rules put in place last year under an Obama appointee. (AP Photo/Jacquelyn Martin, File)

NEW YORK (AP) — The Consumer Financial Protection Bureau has decided to reconsider a key set of rules enacted last year that would have protected consumers against harmful payday lenders.

The bureau, which came under control of the Trump administration late last year, said in a statement Tuesday it plans to take a second look at the payday lending rules. While the bureau did not submit a proposal to repeal the rules outright, the statement opens the door for the bureau to start the process of revising or even repealing the regulations.

The bureau also said it would grant waivers to companies as the first sets of regulations going into effect later this year.

The cornerstone of the rules enacted last year would have been that lenders must determine, before giving a loan, whether a borrower can afford to repay it in full with interest within 30 days. The rules would have also capped the number of loans a person could take out in a certain period of time.

If allowed to go into effect, the rule would have had a substantial negative impact on the payday lending industry, where annual interest rates on loans can exceed 300 percent.

The industry derives most of its profits from repeat borrowers: those who take out a loan, but struggle to repay it back in full and repeatedly renew the loan. When they finalized the rules last year, the bureau estimated loan volume in the payday lending industry could fall by roughly two-thirds. The industry, which operates more than 16,000 stores in 35 states, would likely see thousands of payday lending store closures nationwide. But most of these rules would not have gone into effect until August 2019.