Judge Issues Stay on CFPB Payday Loan Rule
In his ruling, the judge said allowing the rule to go into effect, at the same time the bureau is revising it would cause irreparable injury to the association’s members.
A federal judge has agreed to delay the effective date of the CFPB’s controversial payday loan rule.
In issuing the ruling, Judge Lee Yeakel of the U.S. District Court for the Western District of Texas, reversed a ruling he made earlier this year.
Yeakel said he was changing his decision based on the bureau’s Oct. 26 announcement that it intended to issue a new rule in January governing the regulation’s ability-to-pay requirements. In that announcement, the bureau said it would not issue a new rule governing lenders’ withdrawing payments from a borrower’s bank accounts.
The bureau said it would issue a rule governing payments closer to when the payday rule goes into effect.
The entire payday rule was scheduled to go into effect on Aug. 19, 2019.
In his ruling, Yeakel agreed with the Consumer Financial Services Association of America that allowing the rule to go into effect, at the same time the bureau is revising it would cause irreparable injury to the association’s members.
The CFSA had filed suit challenging the payday loan rule, which had been issued when former CFPB Director Richard Cordray, an Obama Administration nominee, was running the agency. When Acting CFPB Director Mick Mulvaney, a Trump Administration appointee took over, he made it clear that he intended to revising the rule.
CFSA CEO Dennis Shaul said he was pleased with the ruling.
“This is a rule that should never have been written in the first place, and we hope the Bureau will ultimately repeal it outright,” Dennis Shaul CEO said. “The rule as written would decimate the industry, shutter small businesses, force many employees to lose their jobs, and deny millions of hardworking Americans access to much-needed credit.
The NCUA is working on its own rule to make additions to its Payday Alternative Loan program.