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Democratic senators expected to introduce bill requiring small-dollar lenders to register with CFPB

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Democratic senators expected to introduce bill requiring small-dollar lenders to register with CFPB

A group of senators are expected to introduce a bill that wouldrequire lenders of small-dollar loans to register with the Consumer Financial ProtectionBureau, Barbara Mishkin, counsel for Ballard Spahr LLP, wrote in the CFPB Monitoron April 4.

The bill, sponsored by Sen. Jeff Merkley, D-Ore., would amendthe Truth in Lending Act to require any issuers of loans of $5,000 or less to registerwith the CFPB if the loan is closed-ended and payable in installments of less than12 months or if open-ended, repayable within a defined time.

"While perhaps not intended, the open-end plans coveredby the definition could be read to include conventional credit cards," Mishkinwrote.

In addition, any loan made over the internet, telephone, facsimile,mail or email would need "to comply with the laws of the state in which theconsumer resides with respect to annual percentage rates, interest, fees, charges,and such other or similar matters as the bureau may, by rule, determine," thebill states. It would also require any small-dollar transactions issued by a nationalbank to comply with laws of the state where the consumer resides.

The bill would also ban overdraft fees on general-use prepaidcards.