Mulvaney Cozies Up to Loan Sharks, Faces Hurdles

Even as acting (and unlawfully appointed) CFPB Director Mick Mulvaney works to strengthen his relationship with predatory payday loan sharks, legal experts say significant obstacles may stand in his way. That’s surely welcome news to consumers.

More from American Banker:

The Consumer Financial Protection Bureau faces significant obstacles in reopening the payday lending rule, including likely legal challenges from consumer groups and ensuring any change complies with the Administrative Procedure Act, which governs how agencies issue regulations.

The decision this week is seen as a way for acting CFPB Director Mick Mulvaney to attempt to eliminate the payday rule’s core requirement that lenders determine a borrower’s ability to repay a small-dollar loan.

So far, Mulvaney has just delayed the rule indefinitely. But that can’t go on forever and if he attempts to make a substantive change, he will have to provide a reasonable basis for doing so under the Administrative Procedure Act, something that could prove difficult given that the rule was finalized in October on the basis of three years of research.

“To make any changes [to the existing rule] is a high hurdle because it cannot be based solely on a change in policy,” said Quyen Truong, a partner at Stroock & Stroock & Lavan, and a former assistant CFPB director and deputy general counsel. “It likely will be a lengthy process to jump through all the hoops of the Administrative Procedure Act requirements. The agency also would have to point to some lack in data or analysis in the original rulemaking.”



Tennessee Citizen Action is proud to stand with the Stop the Debt Trap Coalition in opposition to Mulvaney’s effort to reverse this critical protection for consumers.

For more on our work to stop payday predators, follow @TNCitizenAction



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