CFPB and Trade Groups File Briefs on Payday Loan Rule Compliance Date | Ballard Spahr srl

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The CFPB and the two trade groups challenging the CFPB’s 2017 last pay / auto title / high rate installment loan rule (2017 rule) have filed briefs in the Texas federal court regarding a compliance date for the payment provisions of the 2017 rule. Submissions were filed in response to court order which requested additional information “as to what would be the appropriate compliance date if the court dismissed the plaintiffs ‘motion for summary judgment and granted the defendants’ motion for summary judgment.”

In his brief, the CFPB argues that the suspension of the compliance date should not exceed 30 days after the court’s decision on the summary judgment. According to the Bureau, a 30-day extension would comply with the Administrative Procedure Act’s requirement of only 30 days’ notice before a rule can come into effect. The CFPB further argues that complying with the payment arrangements is not onerous as neither of the two basic requirements imposed by the payment arrangements (i.e. other factors put forward by the CFPB in support of its position are that (1) the professional group had ample time to comply, (2) the professional groups could not reasonably have relied on the suspension of the compliance date beyond the final judgment, and (3 ) a further extension of the suspension is particularly unwarranted because the sole basis for the suspension (i.e. the unconstitutional referral provision) disappeared when the United States Supreme Court ruled Seila Law and former director Kraninger ratified the payment arrangements.

In their memory, professional groups argue that any order lifting the stay should set a date for compliance no earlier than 445 days (or, at a minimum, 286 days) from the date the court lifts the stay, reflecting the time remaining for compliance when suspension has been requested (or entered). As originally enacted, the 2017 Rule gave lenders 21 months before compliance was required. According to trade groups, the suspension relied on the compliance period and their members reasonably relied on the suspension to postpone “the lengthy and costly implementation process.” They also argue that if the suspension did not count the compliance period, the Bureau will need to set a new compliance date through the development of notice and comment rules. Finally, they argue that if the court allows the CFPB’s motion for summary judgment, it should maintain the stay pending appeal.

Parties have until August 16 to file their responses. The briefing order provides that “[t]The court will examine the case with full knowledge of the facts upon receipt of the parties’ responses and no reply memorandum will be required. This means that in a worst-case scenario, the court could grant the CFPB’s summary judgment motion by the end of this month and compliance with payment arrangements could be required in September.


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