Business Groups Challenge CFPB Payday Loan Rules File Open with Fifth Circuit | Ballard Spahr srl
Occupational groups challenge payment provisions of CFPB’s 2017 rule on last salary / automatic title / high rate installment loan (2017 rule) submitted their opening brief with the fifth circuit. The trade groups have appealed to the Fifth Circuit of the final judgment of the district court granting the CFPB summary judgment motion and suspending the date of compliance of the payment arrangements until 286 days after August 31, 2021 (which would have been until June 13, 2022).
The fifth circuit subsequently placed an order setting the date of compliance of the payment arrangements up to 286 days after the trade group appeal is resolved.
The main argument of trade groups on appeal continues to be that the 2017 rule was void ab initio because the APFC’s unconstitutional dismissal restriction means the Bureau did not have the power to enact the 2017 rule. They also argue that:
- Ratification cannot remedy the constitutional defect because the defect concerns the illegal exercise of governmental power by the Bureau and its director, and not the power of an agent to make decisions on behalf of the Bureau or its director. The only appropriate remedy for invalid regulation is valid regulation.
- The 2017 rule remains invalid because there are two continuing violations of the separation of powers. One violation stems from the Bureau’s funding mechanism, which does not require funding from Congress. The other violation stems from the Office’s unconstitutional exercise of legislative powers vested exclusively in Congress. If Congress gives authority to agencies, it must state an intelligible principle. There is no intelligible principle in the delegation of credits to the director or in “the vague and broad authority of the UDAAP of the Bureau invoked to justify the  To reign.”
- While ratification can sometimes remedy flaws in rule-making, ratification by the Office of Payments Arrangements violates both the CFPA and the APA because it was illegal, arbitrary and capricious. Ratification violates the APA and CFPA, as it was a regulation that required notice and comment under the APA and did not meet CFPA’s requirements for cost-benefit analysis. The ratification is arbitrary and capricious because the development of the Bureau’s 2020 Rules revoking the repayment capacity provisions of the 2017 Rule eliminated the justifications for the payment provisions by rejecting the Bureau’s earlier interpretation of the UDAAP. Ratification was also inconsistent with the cost-benefit analysis required by the APFC because the Bureau’s 2017 cost-benefit analysis of payment arrangements relied on the improvement effects of the arrangements on repayment capacity that the regulation of 2020 has been completely deleted.
- Apart from illegal ratification, payment arrangements should be dismissed as illegal, arbitrary and capricious. Payment arrangements are illegal because they are outside of the UDAAP authority of the Bureau. The Bureau based the payment arrangements on unreasonable and excessive interpretations by its UDAAP authority. Payment arrangements are arbitrary and capricious because the Bureau ignored the offsetting effects of payment arrangements, such as the increased likelihood that a loan will collect sooner than it would have. appropriate) and the Bureau acted on the outdated database. . At a minimum, the payment arrangements are arbitrary and capricious due to their coverage of separate installments of multiple installment loans and debit card and prepaid payments. These payment and transfer methods do not give rise to the damage referred to in the provisions.