CFPB, Trade Group Ask for Delay in Payday Loan Rule & Lawsuit

In a joint filing in the U.S. District Court for the Western District of Texas, the Community Financial Services Association of America and the CFPB asked that the effective date of the payday lending rule be delayed until a new rule is issued or the lawsuit is resolved.

The two groups asked that all proceedings in the lawsuit be placed on hold. And if the lawsuit is revived in the future, the two sides asked that implementation of the payday loan rule be delayed until 445 days after the final ruling.

Both sides agree that the association and its affiliates have “presented ‘a substantial case on the merits’ on at least some of their claims.” That is a reversal from previous agency defense of the rules.

A large portion of the rules are scheduled to go into effect in August 2019.

But the agency’s decision to revisit the rule has created a tremendous amount of uncertainty in the industry, the two sides agreed.

“There is no way to know whether plaintiffs’ members will ultimately need to comply with the payday rule, a modified payday rule, or no rule at all,” the agency and the trade group said.

The CFPB, under Obama Administration appointee Richard Cordray, issued strict rules attempting to rein in payday lenders the agency believed were trapping borrowers in a never-ending cycle of debt.

When Cordray resigned, President Trump selected Office of Management and Budget Director Mick Mulvaney to serve as the agency’s acting director.

Mulvaney immediately signaled a desire to revisit the strict rule and the Spring version of the agency’s regulatory agenda set a target date of February 2019 for the revision.

Meanwhile, the trade group filed suit challenging the rule.