WASHINGTON — Sen. Lindsey Graham, R-S.C., has introduced legislation to overturn the Consumer Financial Protection Bureau’s payday lending rule.
Congress has until early May to overturn the CFPB’s rule to ban high-cost, short-term, small-dollar loans. The rule was finalized in October under former CFPB Director Richard Cordray and went into effect in January, but companies don’t have to comply with most of the provisions until August.
Under the Congressional Review Act, lawmakers can consider blocking regulations within a given time frame. Graham's resolution, which was introduced Thursday, comes as acting CFPB Director Mick Mulvaney has already said the agency will internally reconsider the rule as well.
Mulvaney, who has consistently attacked CFPB policies implemented under Cordray, told reporters in December that it would be more “more appropriate” for Congress to pass a Congressional Review Act resolution to overturn the rule than for the agency to unwind it.
Congress has 60 session days to overturn a rule, which only requires a simple majority to pass, after it is remitted to Congress.
Progressive groups have quickly blasted Graham's resolution. Allied Progress issued a press release Friday citing data from the Center for Responsive Politics showing that Graham has received $35,800 from payday lenders, and noted that that includes over $12,000 from World Acceptance Corp., which had been under investigation by the CFPB until the probe was dropped under Mulvaney.
The payday lending "rule takes a common-sense approach to end the debt trap and protect consumers," Karl Frisch, executive director of Allied Progress, said in the press release. "It took years to get here, and with victory now in sight, payday lending industry-backed politicians like Sen. Lindsey Graham — who has been showered with tens of thousands of dollars in campaign cash from the industry — are attempting to reverse course and pay back their predatory benefactors.”
Similarly, Americans for Financial Reform said Graham's resolution "betrays consumers."
“Senators should stand with their constituents instead of predatory lenders and soundly reject this resolution,” José Alcoff, payday campaign manager at Americans for Financial Reform, said in a press release.
Kevin Bishop, a spokesman for Graham, took issue with the suggestion that the resolution was tied to contributions from payday lenders.
"In Sen. Graham’s last election [in 2014] he raised $11 million. By my calculation the $39K represents 0.003%," Bishop wrote in an email.
Republicans were able to overturn the CFPB’s arbitration rule in October using the Congressional Review Act, but it is unclear if the GOP will be able to use the same process to overturn the payday rule. Their majority has since shrunk to 51-49, and Sen. John McCain, R-Ariz., has been absent from Congress for health reasons.
Kate Berry contributed to this story.