The Consumer Financial Protection Bureau proposed Wednesday to rescind a major part of a landmark Obama-era payday lending rule the requirement that payday installment and vehicle title lenders determine whether borrowers will be able to repay loans The bureau also announced it will likely delay enforcement of that portion of the rule as written until August 2019 The decision met harsh criticism from activists and consumer lending experts who accused the new bureau leadership of effectively gutting the rule Sen Sherrod Brown D-Ohio the top Democrat on the Senate Banking Committee accused the Trump administrations appointees to the bureau of helping payday lenders rob families of their hard-earned money Eliminating these common sense protections will result in millions of hardworking families trapped in a cycle of debt and poverty said Brown in a statement Passions run high on the issue when the bureau finalized the first version of the rule in 2017 over 1 million comments were submitted either in support or opposition of their effort Critics of the proposed change argue that in essence removing the requirement to evaluate a borrowers ability to repay will mean more consumers will need to repeatedly borrow at abnormally high interest rates in order to meet the short time lines and high costs of those loans The Dodd-Frank law that created the bureau requires ability to repay legal requirements for credit cards and mortgages But not for small dollar high interest short term loans Senior CFPB officials who briefed reporters noted the discrepancy One of the officials who requested anonymity as a condition for briefing press on the proposal argued the rule in its current form would be too burdensome for lenders to follow and ultimately reduce their desire to provide credit to many potential borrowers We expect that there will be significant market effects as a result of those requirements said the official Consumer lending researchers and activists were largely unmoved by the CFPBs argument This proposal is not a tweak to the existing rule instead its a complete dismantling of the consumer protections finalized in 2017 said Alex Horowitz a senior researcher on small dollar lending for the Pew Charitable Trusts a Washington think tank in a statement The rule was working Lenders were making changes even before it formally took effect safer credit was already starting to flow and harmful practices were beginning to fade In a statement Hilary Shelton senior vice president for policy and advocacy for the NAACP urged CFPB Director Kathy Kraninger to reconsider the proposal Stripping the key protections of this rule is a disservice to the public said Shelton Industry reactions was more supportive with trade groups representing credit unions that offer short-term loans praising the decision to revisit the rulemaking The National Association of Federally-Insured Credit Unions supports the removal of problematic ability to repay portions of the rule but we also want to ensure that going forward the egregious practices of certain payday lenders are addressed the trade associations president and CEO Dan Berger said in a release Groups representing the payday and installment lending industries demurred from making public comment Senior CFPB officials who briefed reporters about the decision stressed that they and the bureaus new director Trump appointee Kathy Kraninger had not yet reached a conclusion as to what their final version of a rewritten rule might look like Current leaders at the financial regulatory agency itself a political lightning rod since its creation following the passage of the 2010 Dodd-Frank financial law overhaul said they wanted more input on research surrounding small-dollar lending as well as more legal input We think we need more data in essence said a senior CFPB official who requested anonymity as a condition for the press briefing Were seeking public comment on preliminary conclusions but not final conclusions The two officials who briefed reporters also emphasized that the CFPB wont back off enforcement of existing laws with regard to lenders noting three enforcement actions against payday lenders since Kraninger joined the agency following her confirmation late last year But the bureau also proposed delaying further enforcement of the small dollar lending rule already in place for 15 months which it said was in part a response to an ongoing lawsuit from a payday lender in Texas The officials said they braced for criticism from Democrats for the decision but that the bureau did not have sufficient legal justification for writing the 2017 rule in the manner that it was finalized They told reporters they want more input on legal precedent for including the ability to repay in a rule Thats all well and good and we understand that there are going to be a lot of members who are interested in this said a senior bureau official Our position is that Congress writes the law and we follow it The bureau will accept comments on its proposed change to the ability to repay portion of the small dollar rule for the next three months The proposal to delay to 2019 that portion of the rule as its currently written will be open for comment for 30 days