A bipartisan group of lawmakers on Friday introduced legislation to repeal a rule from the Consumer Financial Protection Bureau imposing new restrictions on small-dollar loans.
The bill would use the Congressional Review Act to overturn the payday rule, a procedure that allows Congress to overturn agency regulations with a majority vote. It’s the same playbook used by lawmakers in October to overturn the CFPB’s controversial rule banning mandatory arbitration clauses in financial contracts.
The CFPB finalized its long-awaited rule on payday lending in early October. The rule imposes new underwriting requirements on short-term, high-interest loans with terms under 45 days.
While the rule was designed to curb high-cost lending to cash-strapped consumers, critics including House Financial Services Chairman Jeb Hensarling, R-Texas, have argued that it restricts access to credit for those who need it.
“Once again we see powerful Washington elites using the guise of ‘consumer protection’ to actually harm consumers and make life harder for lower and moderate income Americans who may need a short-term loan to keep their utilities from being cut off or to keep their car on the road so they can get to work,” Hensarling said in a committee press release announcing the Congressional Review Act legislation.
After the payday rule was finalized in October, it was widely expected that Republicans would attempt to overturn it. It’s notable, though, that the effort has attracted bipartisan support in the House.
The bill, as introduced, is sponsored by Rep. Dennis Ross, R-Fla., and co-sponsored by the following members: Reps. Alcee Hastings, D-Fla.; Tom Graves, R-Ga.; Henry Cueller, D-Texas; Steve Stivers, R-Ohio; and Collin Peterson, D-Minn.
Passage in the Senate, however, may be a much heavier lift. The chamber’s vote to overturn the arbitration rule in late October came down to the wire, forcing Republicans to call in Vice President Mike Pence to cast the tie-breaking vote.
Adding to the uncertainty surrounding the future payday rule is the recent change in leadership at the CFPB. Former Director Richard Cordray stepped down late last week, and named one of his deputies, Leandra English, as the agency’s acting director.
The move sparked a legal battle with the White House, which named Office of Management and Budget Director Mick Mulvaney as the interim head of the CFPB. A judge on Tuesday ruled that Mulvaney is the legal acting director.
The Trump administration has not yet nominated a permanent director to lead the CFPB.