We have previously blogged about the industry challenge to the CFPB’s rule on payday/vehicle title/high rate installment loans. The Plaintiffs’ have now filed an Unopposed Motion for Reconsideration and have advised that the CFPB intends to file a separate supporting memorandum. In their Motion for Reconsideration, the Plaintiffs’ argue that a combined stay of litigation (previously approved by the Court) and stay of the Rules’ compliance dates (previously denied by the Court) –
would relieve the parties and the Court of the burdens of litigation that might not be needed, while at the same time protecting Plaintiffs’ members from having to comply with, and prepare for compliance with, an allegedly invalid rule….
But rather than grant or deny the motion in full, the Court’s order severed these two inextricably intertwined proposals. The order thereby granted a combination of relief that was not requested by the parties, and which undermines, rather than furthers, their agreed-upon solution to the dilemma discussed above. Staying the litigation while denying a stay of the Rule relieves the parties and the Court of the burdens of litigation, but it does so without relieving Plaintiffs of the need for litigation…. Thus, absent a stay of the compliance date, Plaintiffs will have no tenable option other than to file a motion for preliminary injunction (and a lift of the litigation stay).
(emphasis in original)
We fully subscribe to the views expressed in the Motion for Reconsideration. However, we hope the CFPB is not putting all of its eggs in one basket and counting on the court to change its mind. A second fallback approach—which we strongly recommend—is for the CFPB to engage in formal notice and comment rulemaking to extend the compliance deadline and provide breathing space for ensuing notice and comment rulemaking on the substance of the Rule. We think the justification for such rulemaking, should it prove necessary, is compelling.