Consumer Advocates Ask Judge: Reject CFPB’s Request for Payday Loan Rule Delay

Four consumer groups are asking a federal judge to deny a request by the CFPB and a payday lending group to place a strict short-term loan rule on hold.

Public Citizen, Americans for Financial Reform Education Fund, the Center for Responsible Lending, and the National Consumer Law Center accuse the agency and the trade group of trying to end run federal laws governing how rules are supposed to be issued.

The CFPB and the Community Financial Services Association of America have asked that that the effective date of the payday lending rule be delayed until a new rule is issued or the lawsuit challenging the rule is resolved. And the groups asked that all proceedings in the lawsuit be placed on hold. In addition, they ask that if the lawsuit is revived in the future, implementation of the payday loan rule be delayed until 445 days after the final ruling.

The financial services trade group filed the suit challenging the strict payday lending rules that were issued by former CFPB Director Richard Cordray. When Cordray resigned, President Trump appointed Office of Management and Budget Director Mick Mulvaney as acting director.

Mulvaney immediately announced that the agency would be reevaluating the rule.

As a Republican House member from South Carolina, Mulvaney had opposed strict regulation of the payday lending industry.

The four consumer groups, on the other hand, have supported strict rules governing the industry, accusing payday lenders of locking borrowers into a cycle of debt since many of the loans have extremely high interest rates and fees.

The groups are asking U.S. District Judge Lee Yeakel of the Western District of Texas to allow them to file a friend-of-the-court brief, saying that the judge would have no other way to hear opposition to the CFPB’s request.

The groups said that if the CFPB wants to delay the compliance date of its own rule, it must follow the Administrative Procedures Act, which governs the rulemaking process.

“The Court should reject the parties’ attempt to jerry rig non-adversarial litigation to effect an end-run around the APA’s statutory requirements,” the groups said.

The groups also are blasting Mulvaney for joining the payday lenders’ trade group in requesting the delay.

“Mick Mulvaney has been doing the bidding of payday lenders for years but putting the CFPB’s weight behind a joint legal motion with their lobbyists is a new low, even for him,” said Jose Alcoff, campaign manager, for the Stop the Debt Trap campaign at Americans for Financial Reform.

He said delaying the lawsuit would provide Mulvaney the time he needs to kill the payday rule.

“It is appalling that an agency with a primary mission of protecting consumers is now teaming up with a payday lending industry that is notorious for trapping people in debt,” said Scott Astrada, director of federal policy at the Center for Responsible Lending, an affiliate of the Self-Help Credit Union.