Last week, the Consumer Financial Protection Bureau (CFPB) made headlines when it announced in Kansas City new proposed rules for the payday loan industry. Although it did garner some mixed reviews, it would give the battered industry a facelift. The rules would apply nationally and duplicate stricter regulations that may already be in place by the states.
Well, the CFPB won’t have Arkansas to kick around as the state is furious with the CFPB.
Soon after the CFPB released its proposal, Arkansas Attorney General Leslie Rutledge sent out a press release, outlining her disappointment with the federal consumer watchdog agency’s lack of respect for state officials. She lambasted the CFPB for failing to meet or consult with state officials across the country.
Rutledge even noted that CFPB director Richard Cordray disregarded her request to meet. Ostensibly, the Arkansas AG sent a letter to Cordray earlier this year asking him to establish a “conference of states” to talk about his proposal and what other ideas the Obama administration may have for payday loans.
She believes that a one-size-fits-all approach by the federal government isn’t feasible. There any many legitimate online and offline payday loan lenders which help people obtain cash who otherwise wouldn’t be able to. There are also many businesses who don’t follow the rules of the current system which is why this approach of one-size-fits-all won’t be effective.
“By disregarding my request and the concerns raised by many others at the state and federal levels about sweeping federal standards that would govern small dollar lending, Director Richard Cordray has made it clear that he is not interested in cooperative federalism,” said Rutledge in a statement.
“This one-size-fits-all federal approach from an unaccountable bureaucrat and agency ignores the interests of the states and will negate reasonable policies that already exist to protect consumers while at the same time allowing the free market to function properly.”
Moving forward, the AG office will review the CFPB’s suggested rules and take it from there.
The Natural State has a long history with the payday loan industry.
In 2008, the Supreme Court of Arkansas concluded that the Check Cashers Act had violated the state’s constitution because it permitted payday loan stores to charge astronomical interest rates – the state deems that consumer loans cannot have interest rates higher than 17 percent per year.
Soon after the Supreme Court ruling, then-AG Dustin McDaniel requested that payday lenders end their operations and void present and past borrowers obligations and stop any collection attempts. They have apparently heeded his request, too, as most payday lenders have gradually exited the state, such as Ace Cash Express and First America Cash Advance.
Will they return to Arkansas? It’s been reported that lawmakers and staffers have been contacted by officials from several bank-affiliated businesses that want to sell products similar to the payday loan industry prior to the end of 2017. It’s unknown what will happen moving forward.