The Aspen Institute’s Financial Security Program (Aspen FSP) appreciates this opportunity to provide comments on the Consumer Financial Protection
Bureau’s (CFPB) Proposed Rule on Payday, Vehicle Title, and Certain HighCost Installment Loans (RIN 3170-AA80).
Aspen FSP is dedicated to solving the most critical financial challenges facing American households, and to shaping policies and financial products that enable all Americans to save, invest, and own. As such, Aspen FSP opposes CFPB’s proposal to rescind the ability-to-repay (ATR) underwriting requirements on payday, vehicle title, and certain high-cost installment loans. ATR underwriting requirements are necessary because they reduce consumers’ exposure to harmful loan terms and features. As mandated in Title X of the 2010 Dodd-Frank Act, CFPB has both the regulatory power and the responsibility to protect those whose credit constraints lead them to high-cost, high-risk products. Underwriting based on the borrower’s ability to repay has positively transformed mortgage lending since the Great Recession by reducing the incidence of high debt-to-income home purchase loans from 25% in 2007 to the current rate of 5-8%.1 A similar principle should guide the regulation of subprime and small-dollar lending, such as payday and auto title loans.