|Posted:||June 1, 2015 01:28 PM|
|From:||Senator John T. Yudichak|
|To:||All Senate members|
|Subject:||Legislation Based on Consumer Financial Protection Bureau (CFPB) proposals to create a Pennsylvania Financial Services Credit Ladder|
|In the near future, I will introduce legislation that ends 'pay-day lending' in Pennsylvania and establishes criterion for lending practices for financial service products based on the recent proposed rules by the federal Consumer Financial Protection Bureau (CFPB).
The CFPB recognizes a growing need for affordable financial service products that enable underserved consumers to build their credit status without getting trapped in a debt cycle often associated with short-term lending products.
My legislation, the PA Financial Services Credit Ladder Act, would put Pennsylvania at the forefront of states by enacting a law that balances consumer access to certain financial services with strong consumer protection regulations that prevent predatory lending practices.
A Pew Charitable Trusts study recently found that 5.5 % of Americans have used short-term loan products - which means over 600,000 Pennsylvanians currently are susceptible to loosely regulated financial services that often trap them in a cycle of debt.
Under my legislation, we will follow the proposals set forth by the CFPB and implement strong guidelines for the lending industry in Pennsylvania. The protections include a minimum loan term of one year, no rollovers, no balloon payments, an annual interest rate cap of 36 percent, mandatory underwriting, credit reporting, credit counseling, and a required license review of lenders. The Secretary of Banking and Securities will have oversight over the program.
If you have any questions about the legislation, please contact Kyle Fitzsimmons in my office at 787-7105.