From: bizjournals.com

What good is having proposed regulations reviewed by small businesses if regulators don’t listen to what they say?

That question is being raised by small payday lenders, who have asked congressional leaders “to prevent the Consumer Financial Protection Bureau from ignoring our views, perspectives and input” as the agency writes new federal regulations for their industry.

Congress requires the CFPB to convene a panel of “small entity representatives” when it’s considering regulations that could have a significant impact on small businesses. This requirement also applies to the Occupational Safety and Health Administration and the Environmental Protection Agency. The idea is that by getting input from small businesses affected by a regulation, agencies can draft rules that would accomplish the government’s goals without being overly burdensome.

The CFPB, however, just appears to be going through the motions, according to Bob Zeitler, CEO of PH Financial Services in Fenton, Mo.

Zeitler was one of 27 “small entity representatives” who met with the CFPB to talk about the agency’s plans for regulating the payday loan industry, which already is regulated at the state level. The agency is considering various restrictions on payday lenders, including requiring them to analyze a borrower’s ability to repay the loan, reject customers who already have taken out too many payday loans, or impose structural limits on the loans.

The new rules also could restrict collection efforts by payday lenders, and impose additional compliance requirements on the industry.

If implemented as initially outlined by the CFPB, the rules would reduce the revenue of small payday lenders by 82 percent on average, according to a report conducted by Charles River Associates for the Community Financial Services Association of America, a trade association representing payday lenders. Many payday lenders would have to close locations, particularly in rural areas.

Zeitler said CFPB had already come to the conclusion that a one-size-fits-all regulatory approach is sufficient. They also had not analyzed how their proposed federal regulations would mesh with existing state regulations of payday lenders, he said.