Payday lending rule proposed change convinces judge to leave stay in place

A federal judge last week left in place a stay on the Aug. 19 effective date of the payday lending regulations now in place, an asterisk to the proposed changes issued in February by the federal consumer financial protection agency.

U.S. District Court Judge Lee Yeakel of the Western District of Texas, Austin Division, opted to keep in place the stay that he imposed in November. In his March 19 ruling, Yeakel wrote that he had received no request to lift the stay on the rule. The stay means that the effective date for the regulation, which was to go into effect in August, remains delayed, at least for now.

“With regard to the stay of the compliance date, the Bureau’s position is that, at the current time, no party is seeking to lift the compliance-date stay for the payments provisions,” Yeakel wrote. “However, should the Bureau do so in the future, the Bureau suggests that Plaintiffs at that time would only be entitled to a stay if Plaintiffs can show various factors, including a likelihood of success on the merits, or at least a ‘substantial case on the merits.’”

On Feb. 6, the CFPB issued proposed rulemakings to eliminate the ability-to-repay provisions of the its payday lending rule and to delay the implementation of those measures by 15 months – to Nov. 19, 2020.

In imposing the stay last fall, Yeakel pointed to a status report filed Oct. 26 by former Consumer Financial Protection Bureau (CFPB) Acting Director John (“Mick”) Mulvaney and the bureau, noting that “the Bureau informs the court that it intends to issue notices of proposed rulemaking in January 2019 to reconsider the Rule and address the Rule’s August 19, 2019 compliance date.” That was apparently good enough for Yeakel, at that time, to stay the effective date – and keep the stay in place, even though the bureau was about a week late in issuing its proposed changes.

“Having considered the parties’ October 26 joint status report, particularly the information that the Bureau has publicly announced it plans to reconsider portions of the Rule and address the Rule’s compliance date and the case file, the court reconsiders the portion of the June 12, 2018 order denying the request to stay the Rule’s compliance date of August 19, 2019,” Yeakel wrote in November.

He also ordered in November that the bureau report back to him, no later than March 1, 2019, “about proceedings related to the Rule and this litigation …” Last week’s ruling was Yeakel’s ruling on the latest developments.

Yeakel March 19 order in Community Financial Services Association of America, Ltd. and Consumer Service Alliance of Texas vs. CFPB