Mulvaney, who serves on a temporary basis as the head of the Consumer Financial Protection Bureau (CFPB), not to undo or weaken the CFPB’s payday lending rule.

The rule would require lenders to determine upfront whether or not a borrower can afford to pay back a loan without having to take out another loan. The rule represents an important step in reining in predatory business practices by payday lenders nationwide that are designed to exploit the financial hardships facing millions of hardworking families.

“The payday lending rule’s purpose is pretty simple: lenders should figure out whether a borrower is able to pay back a loan so that consumers don’t get caught up in a revolving cycle of debt,” said Sen. Warner during his questioning of Director Mulvaney.

Congress created the CFPB to protect Americans from unfair, deceptive and abusive lending practices. Predatory lenders often target hardworking borrowers who find themselves in need of quick cash—often for things like necessary car repairs or medical emergencies—by charging them excessive interest rates and hidden fees that trap them in long-term cycles of debt. Nearly 12 million Americans use payday loans each year, incurring more than $9 billion annually in fees. The CFPB developed the payday lending rule over the course of five years and reviewed more than 1 million public comments. 

Last month, Sen. Warner also wrote to Director Mulvaney urging him not to repeal the payday lending rule.

The full transcript of Sen. Warner’s exchange with Director Mulvaney follows:

Warner: I want to talk to you about the payday lending rule. Now, I think the payday lending rule’s purpose is pretty simple—and I think actually most Americans regardless of side would agree on this—that lenders should figure out upfront whether a borrower is able to pay back a loan and to make sure that consumers don’t get caught up in a revolving cycle of debt by folks that don’t have the same kind of regulatory oversight that our traditional lending institutions do. Now, you’ve been in this job a few months, acting in this job. Did you order the Bureau to engage in a rule making process to reconsider the rule on payday lending?

Mulvaney: Yes sir.

Warner: And how would revoking the rule or changing it help consumers, particularly consumers who are living paycheck to paycheck?

Mulvaney: Senator, I don’t automatically conclude that making an indication to revisit the rule assumes that we will be revoking the rule or even changing the rule. I have the right under the statute to revisit the rules, which I'm doing, but we have not arrived at any preconceived notions of outcomes. That would violate the Administrative Procedures Act, which we have not done.

Warner: But sir, my understanding is this rulemaking took a number of years. It was a subject of a great deal of scrutiny. I believe there was industry input as well as consumer input and, I guess, I really wonder why in your first few months of coming into this acting role that this would rise to the top of a priority that would say we need to relook at the practices of payday lenders, which I think most folks would agree is a last resort financial tool and one that was absolutely appropriate for this Bureau to take on.

Mulvaney: Again I think was appropriate for it to take on. Although I think you could make the argument that the statute simply says you have to supervise this industry, which may not include regulating, different story for another day perhaps. But why was it at the top of the list? Because it was the last thing the previous Director did on his way out the door. There was a bunch of public criticism as to, or questions, as to whether or not it had been rushed. So for a variety of reasons, I thought it was entirely appropriate in my role as acting Director to do that the very first thing. In fact, I think I did it the first or second day I was there.

Warner: Mr. Mulvaney, I think there was a great deal of work that went on and I think the previous Director took those actions because of an ongoing need that people on both sides the aisle had discussed for a long time. I was disappointed you took that as your first action.

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