The CFPB filed a request to lift the suspension of the compliance date for payment arrangements in its 2017 last pay / auto title / high rate installment loan rule (2017 rule).
In May 2018, the Texas Federal District Court, hearing the lawsuit filed by two business groups challenging the 2017 rule, issued an order staying the lawsuit. Subsequently, in November 2018, the court issued an order suspending the August 19, 2019 compliance date for the repayment capacity provisions of the 2017 rule and its payment provisions. Following the cancellation by the CFPB of the capacity of the 2017 rule to reimburse provisions in July 2020, the parties jointly requested that the stay of the dispute be lifted. The court issued an order in August 2020 lifting the stay and the parties then filed counterclaims for summary judgment. Briefing on cross movements concluded in December 2020.
Earlier this month, in response to the June 2021 U.S. Supreme Court decision in Collins vs. Yellin (previously subtitled Collins v. Mnuchin), the professional groups have filed a Notice of potentially relevant appeal proceedings (Opinion). In Collins, based on its decision in Seila Law, the Supreme Court ruled that the structure of the Federal Housing Finance Agency is unconstitutional because the 2008 Housing and Economic Recovery Act only authorizes the president to dismiss the director of the FHFA “for a valid reason ”. Despite ruling that the structure of the FHFA was unconstitutional, the Supreme Court also ruled that the appropriate remedy for the constitutional violation was not to invalidate the actions of the FHFA challenged by the plaintiffs. However, the Supreme Court said that plaintiffs could nonetheless be entitled to retroactive relief if they could prove that the unconstitutional remand provision caused prejudice and referred the case to the Fifth Circuit.
In the notice, the business groups inform the district court that the Fifth Circuit has ordered an additional briefing on the impact of the Supreme Court’s ruling in the Collins pre-trial detention and Cashing all U.S. checks. (Cashing all U.S. checks involves a constitutional challenge to a CFPB implementing measure that former director Kraninger ratified following the Supreme Court ruling Seila Law decision.) The trade groups point out that both Collins and Cashing all U.S. checks involve the question of the appropriate remedy for actions taken by an agency manager while unconstitutionally immune from dismissal by the president. The CFPB filed a response to notice in which he argues that there is no reason for the district court to postpone a decision on summary judgment counterclaims until the Fifth Circuit decides Collins and Cashing all U.S. checks because these cases will not resolve the remaining issues regarding payment arrangements.
In its request to lift the suspension of the execution date of the payment provision, the CFPB reaffirms that the two cases do not justify the district court ruling on the counterclaims in summary proceedings and asking the court to lift the suspension of the compliance date if he nevertheless wishes to postpone his decision until the Fifth Circuit rules in both cases. According to the CFPB, the only reason given by the professional groups to maintain the compliance date was that the professional groups had a substantial record of the fact that the 2017 rule had been promulgated by a CFPB director who was unconstitutionally in effect. shelter from revocation. The CFPB argues that Collins confirms that professional groups cannot obtain relief on the basis of the unconstitutional referral provision.
The main motivation for the CFPB’s request may not be to lift the stay but rather to induce the district court to rule on summary judgment motions. Nonetheless, the CFPB’s continued insistence that the tribunal lift the suspension, immediately or after a short delay, ignores the fact that such an action would subject the industry to substantial costs and burdens at a time when it does not. may not know whether the payment arrangements will be fully or partially validated by the courts and, most importantly, whether the rule processing of debit card payments will survive. If the court validates the payment arrangements in any way, its decision on debit cards will have a huge impact on how the industry complies with the payment arrangements. Thus, the suspension should remain in effect for a period sufficient to allow a measured response from the industry after any adverse decision on the merits.