The Consumer Financial Protection Bureau and the payday lending industry trade groups filed a request Thursday asking a federal judge to delay the date for the bureau’s regulation on payday lending to go into effect. Payday loans are small, triple-digit interest rate loans that often become a debt trap for low- and moderate-income consumers.
The motion was part of a lawsuit filed by two payday lending trade groups, the Consumer Financial Service Association of America and the Consumer Service Alliance of Texas. The trade groups sued the bureau seeking to overturn its payday loan consumer protection rules. The request is unusual in that the bureau, which is supposed to be a consumer protection agency, filed the motion along with lawyers for the payday lending industry.
“The Trump administration is siding with payday lenders in seeking an indefinite delay for already long-overdue safeguards on predatory triple-digit interest rate loans,” said Christopher Peterson, financial services director for the Consumer Federation of America. “This is a profound disappointment for anyone who cares about the welfare of struggling consumers.”
The motion:
- Requests a suspension of the lawsuit while the bureau reconsiders its own consumer protection rules. The motion asks for a “stay” in the litigation that would suspend the lawsuit while the federal government considers changes to the bureau’s rules.
- Seeks to delay the effective date of the bureau’s payday lending rules. The motion asks the court to put off the date the payday lending rules go into effect until 445 days after the final decision in the lawsuit. Because both parties want to suspend the lawsuit, the delay in carrying out the consumer protection rules could last years or, as a result, become permanent.
- Requests permission from the court to waive the bureau’s normal obligations to defend itself. Under the usual court procedures, a federal judge would expect the bureau to defend itself by answering the payday lending industry’s allegations. Instead of defending itself, the bureau asked for permission to stand down in the payday lenders’ lawsuit.
“The consumer bureau spent years studying to craft compromise rules that would provide protection against some of the very worst abuses in payday lending,” said Peterson. “But now, under the Trump administration, the consumer bureau is working hand-in-hand with the payday lending industry to facilitate triple-digit interest rate loans to the working poor.
“Instead of protecting the public, under the Trump administration, the consumer bureau is capitulating to some of the worst predators in consumer finance by refusing to defend its own work,” he said. “This is a sad day for those that hoped for a federal agency focused on protecting the public from special interests.”
