The American Banker has reported that last week, Senator Lindsey Graham introduced a joint resolution under the Congressional Review Act (CRA) to override the CFPB’s final payday/auto title/high-rate installment loan rule (Payday Rule). The CRA is the vehicle used by Congress to overturn the CFPB’s arbitration rule in a party-line vote.
In December 2017, a bipartisan joint CRA resolution to override the Payday Rule was introduced in the House and, in January 2018, the CFPB announced that it intends to engage in a rulemaking process to reconsider the Payday Rule pursuant to the Administrative Procedure Act (APA).
To be eligible for the special Senate procedure that allows a CRA resolution to be passed with only a simple majority, the Senate must act on the resolution during a period of 60 “session days” which begins on the later of the date when the rule is received by Congress and the date it is published in the Federal Register. While the deadline for voting on a CRA resolution cannot be definitively determined in advance because of uncertainty as to which days going forward will count as “session days,” it appears the deadline will occur by mid-May.
As we previously commented, to change the Payday Rule pursuant to the APA, the CFPB will have to follow the APA’s time-consuming notice and comment procedures. In addition, since any changes made by the CFPB are likely to be challenged in litigation, the CFPB will need to successfully defend a revised rule or its withdrawal of the existing rule.
Given the hurdles created by the rulemaking process, the CRA provides a “cleaner” and quicker vehicle for overturning the final rule. However, there is no assurance that the majorities needed to override the Payday Rule under the CRA can be assembled in both the House and the Senate. Since the Senate passed the CRA resolution overturning the arbitration rule, the Republican’s majority has narrowed to 51-49, and Senator John McCain has been absent from Congress for health reasons.
According to Politico, CFPB Acting Director Mick Mulvaney will testify before the House Financial Services Committee on April 11, 2018. Undoubtedly, he will be asked about the CFPB’s plans to revisit the Payday Rule.