Credit union regulator notes payday loan alternative remains on agency agenda; rejects CRA requirement

A final rule making changes to the payday alternative loan model used by credit unions is “on my agenda,” the board chairman of the federal regulator of credit unions said Wednesday.

Participating in a “fireside chat” at the Cato Institute’s “Summit on Financial Inclusion,” National Credit Union Administration (NCUA) Board Chairman Rodney Hood said he had no timetable as yet for considering the final rule.

However, the agency’s spring 2019 regulatory agenda (published in late May) lists a final rule on “PALS II” (payday alternative loans, alternative two) as a target for action in the upcoming months. Proposed last summer, PALS II would modify current rules for the minimum and maximum amount (to $2,000) of the loans, eliminate the minimum membership requirement, and increase the maximum maturity (to 12 months) for the loans.

In its request for comment last year, which closed in early August, the agency also asked for comments on a third PALs III alternative, which could include differing fee structures, loan features, maturities, and loan amounts.

The agency said in the spring agenda that it is working toward finalizing a PALs II rule.

In other comments, according to Credit Union Times (which first reported Hood’s remarks at the Cato event), the NCUA Board chairman supported an increase by Congress of the business lending ceiling imposed on credit unions.

However, he indicated credit unions should not be subject to the anti-redlining Community Reinvestment Act (CRA). Hood said CRA was a punitive measure enacted by Congress against banks in the wake of their redlining activities. “I do not believe that credit unions need punitive measures,” he said, the Times reported.