Congress has lost its chance to toss out the Consumer Financial Protection Bureau’s payday lending rule, but bigger fights over the rule’s fate are still brewing.
The Senate’s deadline for approving an override of the rule under the Congressional Review Act expires Wednesday night, according to the Stop the Debt Trap campaign, a coalition of consumer advocates, labor groups and other activists. A spokesman for Majority Leader Mitch McConnell did not respond for comment on the deadline.
While calculating the final end point for a Congressional Review Act bid can be tricky — it’s based on a
“Even if the deadline were a month from now, I don't think — and I never thought — that there was much of a chance that Congress would override the payday lending rule,” said Alan Kaplinsky, a partner at the law firm Ballard Spahr.
The lack of movement on the measure is significant given how widely used the legislative tool has become this term. Lawmakers have
Why didn’t payday make the cut? Perhaps most crucially, the rule affects a much narrower slice of the financial industry, limiting support for its appeal from outside groups. As of Wednesday, the resolution, introduced by Sen. Lindsey Graham, R-S.C., was co-sponsored by just three additional lawmakers, Sens. Pat Toomey, R-Pa., Ted Cruz, R-Texas, and Jodi Ernst, R-Iowa. The indirect auto lending resolution, meanwhile, had 24 co-sponsors, along with sponsor Sen. Jerry Moran, R-Kansas, who spearheaded the effort.
But that hardly means the rule will remain in place as it’s written today.
While acting Director Mick Mulvaney said last year that modifying the payday rule was a task for Congress, he’s since indicated that he will
“It's a battle that's going to be fought tooth and nail by both sides,” Kaplinsky said.
Consumer advocates note that there are a number of ways the agency could potentially narrow the rule, effectively watering it down. That might include altering provisions that require a lender to assess a borrower’s ability to repay and that limit a lender’s ability to make successive debits from a customer’s account when the transactions don’t process.
A pending legal case could also give Mulvaney another opening to make changes to the payday measure. The CFPB must respond next month to the lawsuit by two trade groups
“We're concerned and we're basing that mainly on [Mulvaney’s] historical record as acting director,” said Scott Astrada, director of federal advocacy for the Center for Responsible Lending. “You're going to see a shift from Capitol Hill to the courts and the agency — that's going to be the focal point for the future of the rule.”
A CFPB spokesman did not respond to questions about how the bureau might address the payday rule going forward.
The outcome for the rule is unclear at this point — the only certainty is that while the congressional battle may be over, the larger fight is just heating up.
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