Judge Continues “Stay” on Small-Dollar Rule
Federal District Judge Lee Yeakel provided a reprieve to short-term, small-dollar lenders last week by continuing to “stay” the Consumer Financial Protection Bureau’s (CFPB) Small-Dollar Rule. The rule’s provisions were initially set to go into effect on August 19, 2019.
Both parties in the lawsuit argued for the judge to delay the compliance date for the rule. The plaintiffs in the case, (i.e. the Community Financial Services Association of America), asked the judge to delay the rule until the CFPB finalizes the rulemaking process. For some background, the CFPB proposed two rules that would amend the Small-Dollar Rule in early February: the first proposal would rescind the Ability-to-Repay (ATR) requirements; the second would extend the compliance date for the ATR requirements for 15 months.
In contrast, the CFPB asked the judge to stay the rule only until the Fifth Circuit Court of Appeals renders a final decision in the All American Check Cashing case, which is “a challenge similar to Plaintiffs’ constitutional challenge to the structure of the Bureau.”
Judge Yeakel decided to continue the “stay” for the Small-Dollar Rule without indicating when he would lift the stay. Both parties were also ordered to file a status report “informing the court about proceedings related to the Rule and this litigation as the parties deem appropriate” no later than May 17.