1. CFPB Proposes New Rule that Cracks Down on Predatory Lending CFPB PROPOSES NEW RULE ON PAYDAY LOANS June 2, 2016 | Hunter Hamrick Sources: The Hill, “Consumer Agency Unveils Payday Loan Rules,” June 2, 2016; The Hill, “Clinton Hails Proposed Payday Loan Rules,” June 2, 2016; US House Committee on Financial Services Democrats, “CFPB Payday Proposal A Step In The Right Direction,” June 2, 2016; US House Committee on Financial Services, “For Struggling Americans, the Struggle Just Got Harder,” June 2, 2016. Analysis This rule was proposed as a response to a report published by the Consumer Financial Protection Bureau on online payday loans, single payment auto title loans, long term high-cost loans, and their effects on consumers House Financial Services Chairman Jeb Hensarling has expressed his discontent for the bill commenting that it a gross overreach of government authority House Financial Services Ranking Member Maxine Waters expressed her support for the new rule commenting that protects Americans from abusive, predatory lenders Presidential candidate Hilary Clinton praised the rule Overview of the CFPB Rule on Payday Loans Payday Loans Rule Under the new rule, payday lenders would have to assess a borrower’s ability to make payments while still meeting basic living expenses and other financial obligations. Before authorizing a payday loan, lenders would have to analyze the consumer on six criteria Who is Subject to the Rule 1.Short-term loans that have terms of 45 days or shorter, including 14-day and 30-day payday loans, as well as short- term vehicle title loans that are usually made for 30-day terms 2.Longer-term loans that exceed 45 days that have a total cost of credit that exceeds 36 percent and has a lien or other security interest in the consumer’s vehicle or form of “leveraged payment mechanism that gives the lender a right to initiate transfers from the consumer’s account Jun 2 The Consumer Financial Protection Bureau published the newly proposed rule about payday loans

2. CFPB’s New Rule would Exclude Several Types of Credit and would Require Lender to Look at Six Things CFPB PROPOSES NEW RULE ON PAYDAY LOANS June 2, 2016 | Hunter Hamrick Sources: Consumer Financial Protection Bureau, “We’ve Proposed A Rule to Protect Consumers From Payday Debt Traps,” June 2, 2016. Criteria Lenders Must 1.Verify the Consumer’s net income 2.Verify the Consumer’s debt obligations using a national consumer report and a consumer report from a “registered information system” 3.Verify the Consumer’s housing costs or use a reliable method of estimating a consumer’s housing expense based on the housing expenses of similarly situated consumers 4.Forecast a reasonable amount of basic living expenses for the consumer expenditures necessary for a consumer to maintain the consumer’s health, welfare, and ability to produce income 5.Project the consumer’s net income, debt obligations, and housing costs for a period of time based on the term of the loan 6.Determine the consumer’s ability to repay the loan based on the lender’s projections of the consumer’s income, debt obligations, and housing costs and forecast of basic living expenses for the consumer Overview of CFPB Rule Credit Exemptions and Criteria for Payday Loans Exempted Consumer Credit Types 1.Loans extended solely to finance the purchase of a car or other consumer good in which the good secures the loan 2.Home mortgages and other loans secured by real property or a dwelling if recorded or perfected 3.Credit Cards 4.Student Loans 5.Non-Recourse pawn loans 6.Overdraft services and lines of credit