The Consumer Financial Protection Bureau plans to do away with the underwriting conditions of its payday lending rule, American Banker reported, citing unnamed sources with knowledge of the proposal.
The new CFPB chief Kathy Kraninger may reportedly scrap the rule that required lenders to verify a borrower's income along with their debt and other spending to gauge their ability to pay back the credit while being able to pay for their living expenses, the publication added. The CFPB is expected to propose reopening the rule for public comment in the next few days or weeks, according to the news article.
The new proposal is reportedly also expected to remove limits on repeat reborrowings by a single consumer.
As per the report, consumer advocates may sue the CFPB over the change after the rule is finalized, as the current rule was seen by consumer advocates as a preventive measure against spiraling debt for consumers who rely on short-term credit.