The NCUA intends to consider adding a new option to its Payday Alternative Loan Program, according to documents filedwith the Office of Management and Budget.

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The agency plans to propose rules “modifying the minimum andmaximum amount of the loans, eliminating the minimum membershiprequirement, and increasing the maximum maturity for these loans,”according to its Spring regulatory agenda, released by OMB onWednesday.

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The new program would not replace the current PAL program, butwould supplement it. The outline said that the agency also willsolicit comments on the possibility of creating a third loanoption, which would include different “fee structures, loanfeatures, maturities, and loan amounts.”

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The changes would have to go through the regulatory process. Theagenda states that the proposal will be released on “5/00/18.”

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It is unclear whether that date is merely a placeholder or ifthe NCUA intends to release its proposal this month. An NCUAspokesperson would not elaborate on the OMB filing.

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Through its PAL program, the NCUA permits federal credit unionsto charge an interest rate of 1,000 basis points above the maximuminterest rate established by the NCUA board and an application feeof not more than $20.

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However, few credit unions participate in the program becausethey do not consider it to be profitable.

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The OMB released its version of the government unifiedregulatory agenda, which includes all federal agencies onWednesday.

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Under the CFPB's agenda, the agency states that it still plansto revisit the agency's controversial payday lending rule and setsa date of February 2019 for completing that review.

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In issuing the original payday lending rule, the CFPB said itwas attempting to crack down on so-called payday lenders that makeloans at extremely high interest rates.

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However, the rule exempted credit unions making loans thatconform to the NCUA's PAL program.

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The CFPB's rule, issued under the regime of former agencyDirector Richard Cordray, was considered to be strict and wasroundly criticized by Republicans. Now, the agency is headed byActing Director Mick Mulvaney, a Trump Administration appointee whois considered much more sympathetic to the payday lendingindustry.

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Credit union trade groups welcomed the news that the NCUA wasplanning to propose new options under the program.

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“CUNA supports expansion of payday alternative loans,” said RyanDonovan, CUNA's chief advocacy officer. “Historically, creditunions have offered consumers options for short-term, small-dollarlending, without fear of predatory rates and terms fromunscrupulous payday lenders. This is an important market to serveand CUNA appreciates NCUA's commitment to expand opportunities forcredit union lending.”

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NAFCU has asked the NCUA to re-evaluate its program to ensurethat members have alternatives, said Alexander Monterrubio ,NAFCU's director of regulatory affairs.

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“It's very difficult for credit unions to use the PaydayAlternative Loan Program,” he said, adding that the rate ofparticipation usually is around 15% of all credit unions.

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He said he hopes the NCUA shortens the waiting time that newmembers must wait before taking out a short-term loan and moves toincrease the profit margins for the loans.

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