A federal court has delayed the effective date of the Consumer Financial Protection Bureau’s payday lending rule, after the agency said it would propose changes to the regulation as early as January.
U.S. District Judge Lee Yeakel on Tuesday reversed a
"The court concludes that to prevent irreparable injury a stay of the Rule's current compliance date of August 19, 2019, is appropriate," Yeakel, a judge in the U.S. Disrict Court in the Western District of Texas, wrote in a four-page
However, the judge denied a request to further stay the compliance date until after the lawsuit filed by the two trade groups is resolved. Community Financial Services Association of America and Consumer Service Alliance of Texas had
Under the new order, the two trade groups must continue to report to the court, which will revisit the stay depending on how the CFPB acts.
The CFPB informed the court on Oct. 26 that it planned to issue a notice of proposed rulemaking in January to
The trade groups applauded Yeakel's latest ruling.
“We are pleased with the Court’s decision to hit the pause button on the Bureau’s misguided small-dollar rule, as staying the compliance date is the logical and reasonable approach to avoid forcing companies to endure the cost of complying with a rule that may never take effect,” said Dennis Shaul, CEO of the Community Financial Services Association of America.
The judge said the trade groups had filed a status report in August informing the court that the bureau was engaged in “ongoing work to prepare a notice of proposed rule-making to reconsider the Payday Rule and expects to issue a notice of proposed rule-making by early 2019.”
“Plaintiffs again represented that their members will continue to face substantial costs and irreparable injury absent the court staying the Rule's compliance date,” Yeakel wrote.
Payday lenders have lobbied heavily to kill the payday rule, which would represent the first federal regulations of payday lenders.
Lenders claim the existing rule failed to demonstrate consumer harm, ignored the input of payday customers, and would put more than 70% of payday lenders out of business.