WASHINGTON (Reuters) - A leading trade group for small-dollar lenders on Monday asked a federal court to block rules that are meant to shield consumers from predatory loans.
Lenders cannot make loans to borrowers who do not have an ability to repay and lenders may not drain a borrower’s savings in order to settle a loan, according to rules for payday lenders issued in November 2017 by the Consumer Financial Protection Bureau.
Those rules should be scrapped, the Community Financial Services Association of America (CFSA) argued in court.
The payday lending rule “was motivated by a deeply paternalistic view that consumers cannot be trusted with the freedom to make their own financial decisions,” the trade group argued.
Mick Mulvaney, President Donald Trump’s pick to lead the CFPB, has already said he intends to invalidate the payday rule as soon as possible.
The case was brought in the U.S. District Court for the Western District of Texas, Austin Division.
Reporting by Patrick Rucker; Editing by Tom Brown