Metsger urges ‘blanket’ PAL exemption from payday rule

NCUA Board Chairman Rick Metsger on Wednesday called on CFPB to give credit unions a “blanket exemption for payday alternative loans,” or PALs, in its payday lending rule. NAFCU has been advocating this exemption due to provisions in the rule that would increase the regulatory burden on credit unions.

“NAFCU appreciates Chairman Rick Metsger and Board Member J. Mark McWatters’ support of credit unions and their responsible lending practices, and we thank Chairman Metsger for reaching out to CFPB to avoid regulation that would surely hamstring credit unions’ efforts to lend,” said NAFCU Director of Regulatory Affairs Alexander Monterrubio. “Credit unions cannot be expected to offer their members the same excellent products and services while also facing inconsistent regulation from multiple regulators. CFPB must provide an explicit exemption for credit unions in the final rule in order to avoid punishing good actors along with bad.”

In June, CFPB proposed a 1,300-page payday lending proposal that included a partial carve-out for PALs but did not completely exempt credit unions. In a letter from Metsger, NCUA urged the bureau to go further.

“We respectfully request the Bureau exempt FCUs completely from its final rule for loans made under and consistent with NCUA’s PALs regulation,” Metsger wrote. “While the proposed rule included a conditional exemption for PALs compliant loans, it would nevertheless increase compliance burdens for credit unions and potentially divest NCUA of the flexibility to adjust its rule as it sees fit to reflect the unique characteristics of credit unions.”

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