Labor, Consumer Groups Challenge CFPB Proposal to Ease Payday Loan Regulation

A coalition of consumer and labor groups is challenging the Consumer Financial Protection Bureau’s proposal to ease an Obama-era restriction on payday lenders, using language that suggests there are legal grounds to block the new rule. CFPB Director Kathy Kraninger in February introduced the bureau’s proposed plan to effectively unwind regulation imposing underwriting standards on payday lenders, which was originally supposed to go into effect Aug. 19. The proposed rule has been championed by payday and auto title lenders but opposed by consumer groups.  The coalition, led by Americans for Financial Reform and the Center for Responsible Lending, submitted its 220-page comment Thursday, when the comment period on the CFPB’s proposal closed. The consumer advocates called the proposal “arbitrary and capricious,” a direct reference to the Administrative Procedure Act, which tells courts to invalidate agency actions that are found to be “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.”