Legal haggling over the federal consumer financial protection agency’s regulation of payday loans took a new turn in federal court in Texas Tuesday when a district court judge found the regulation’s effective date remains in force.
Federal Judge Lee Yeakal denied a request by Bureau of Consumer Financial Protection Acting Director Mick Mulvaney and two payday lender advocacy groups to delay the effective date, which is August 2019.
The court had received motions filed by four consumer groups challenging the payday lenders’ groups efforts (with the agency’s support) to delay the compliance date of the rule.
The U.S. District Court for the Western District of Texas (in Austin) received motions brought by the four consumer groups – Americans for Financial Reform Education Fund, Center for Responsible Lending, National Consumer Law Center, Public Citizen, Inc. – outlining their opposition to the agency’s plan to hold off on enforcing its rule, which was finalized in November 2017.
The advocacy groups were responding to a joint May 31 motion by the bureau and two payday lenders’ groups that had sued the bureau to prevent enforcement of the rule. The two groups are the Community Financial Services Association of America, Ltd., and Consumer Service Alliance of Texas, groups that describe themselves in court filings as trade associations with members who are engaged “in the business of offering or facilitating payday loans and similar consumer financial products.”
The joint motion by the bureau and the two payday lender groups asked that the court stay the lawsuit brought by the payday lenders and stay the rule’s compliance date until 445 days after final judgment in the litigation. The groups have argued that, this spring, the bureau reiterated its intent to initiate a rulemaking to reconsider the Payday Rule and informed OMB that it expects to issue a notice of proposed rulemaking for this purpose by February 2019.
Given that, the groups (with the bureau) urged the court to put their own lawsuit on hold.
However, on June 2 (a Saturday) the four consumer advocacy groups filed a motion that they be allowed to file an amicus brief opposing the bureau/payday lenders’ request for a stay of agency action pending review. The groups argued that, if the bureau wants “to delay the compliance date of its own regulation, it must follow the APA’s (Administrative Procedures Act) procedures for agency rulemaking.”