Not So Fast: CFPB Effort to Reopen Payday Rule Faces Hurdles
American Banker covers the Consumer Financial Protection Bureau’s decision to delay the small-dollar loan rule.
The Consumer Financial Protection Bureau faces significant obstacles in reopening the payday lending rule, including likely legal challenges from consumer groups and ensuring any change complies with the Administrative Procedure Act, which governs how agencies issue regulations.
The decision this week is seen as a way for acting CFPB Director Mick Mulvaney to attempt to eliminate the payday rule’s core requirement that lenders determine a borrower’s ability to repay a small-dollar loan.
Last week, the Competitive Enterprise Institute, a conservative think tank, sent a letter to the Office of Management and Budget, which Mulvaney also runs, requesting that it reject the CFPB’s final payday rule for violating the Paperwork Reduction Act.
“We can’t point to our complaint as the basis on which the payday rule was reopened, but we hope it did have an impact on OMB and CFPB’s thinking,” said Sam Kazman, the institute’s general counsel.
Meanwhile, Daniel Press, a policy analyst at the institute, released a report Tuesday titled “How the Consumer Financial Protection Bureau’s Payday Loan Rule Hurts the Working Poor.”
“Small-dollar loans provide a valuable service to people in difficult financial conditions,” the report stated. Data in the report could be used to provide a basis for reopening the rule under the Administrative Procedure Act.
Read the full article at American Banker.