NEW YORK (AP) The nations federal financial watchdog said Wednesday that it plans to abolish most of its critical consumer protections governing payday lenders.
The move is a major win for the payday lending industry, which argued the governments regulations could kill off a large chunk of its business. Its also a big loss for consumer groups, who say payday lenders exploit the poor and disadvantaged with loans that have annual interest rates as much as 400 percent.
The cornerstone of the regulations was a requirement that lenders make sure borrowers could afford to repay a payday loan without being stuck in a cycle of debt, a standard known as ability to repay. This standard would be eliminated under the new rules. Another part of the rules, which would have limited the number of payday loans a person could roll over, was also eliminated.