The CFPB and the two trade groups challenging the CFPB’s 2017 final payday/auto title/high-rate installment loan rule (2017 Rule) have filed responses with the Texas federal court  regarding a compliance date for the 2017 Rule’s payment provisions.

The responses reply to the briefs filed by the parties following the court’s issuance of an order requesting additional briefing “concerning what would be the appropriate compliance date if the court were to deny Plaintiffs’ motion for summary judgment and grant Defendants’ motion for summary judgment.”  The briefing order provides that the “[t]he court will consider the matter fully briefed upon receipt of the parties’ responses and no reply briefs will be necessary.”  As a result, lenders now face the risk that the court could rule quickly in favor of the CFPB on its summary judgment motion and compliance with the payment provisions could be required as soon as 30 days thereafter.

In its brief, the CFPB argued that the stay of the compliance date should remain in place for no more than 30 days after the court’s decision on summary judgment.  The trade groups, in their brief, argued that any order lifting the stay should set the compliance date no earlier than 445 days (or, at a minimum, 286 days) from the date the court lifts the stay, reflecting the time left for compliance when the stay was sought (or entered).  As originally promulgated, the 2017 Rule gave lenders 21 months before compliance would be required.

In its response, the CFPB argues that the stay should be lifted because all of the circumstances that initially justified the stay have changed.  First, according to the Bureau, the trade groups can no longer establish a substantial case on the merits, much less a likelihood of success, because after the U.S. Supreme Court decided Seila Law and former Director Kraninger became removable by the President without cause, she ratified the payment provisions.  In addition, the unconstitutional removal provision did not cause any harm to the trade groups because, even if the provision prevented President Trump from firing former Director Cordray, a Director appointed by President Trump who he could remove without cause expressly approved the payment provisions.

The Bureau further argues that the balance of equities no longer support a stay because the “run-of-the-mill costs [the trade groups’] members will incur to come into compliance with the Payment Provisions—adjusting IT and compliance systems, revising client communications, and training employees…do not come close to outweighing the harm that keeping the Payment Provisions stayed would cause the Bureau and the public.”  Finally, the Bureau argues that the trade groups are not entitled to a lengthy extension of the stay because they “have now had 1,324 days and counting to make preparations, and they have only themselves to blame if they sat on their hands.”  According to the Bureau, the trade groups “have long been on notice that the Court could enter judgment and lift the stay at any time.”

In their response, the trade groups argue that because a stay is designed to preserve the status quo, any lifting of the stay must restore the parties to the pre-stay status quo and provide the trade groups’ members with the time left for implementation that they had when the stay was sought (445 days) or, alternatively, when the court entered the stay (286 days).  They also argue that the Bureau’s assertion that the trade group’s members have had time to comply with the payment provisions “perversely assumes that they should have undertaken the very implementation burden that the stay was designed to avoid while the Court was adjudicating the merits.”  Calling the Bureau’s position “a bait and switch,” they argue that the Bureau’s 30-day timetable “would put Plaintiffs’ members in a far worse position than before the stay, because implementation in a shortened timetable is far more expensive.”  They also renew the argument made in their brief that if the stay did not toll the compliance period, the Bureau must undertake a new notice-and-comment rulemaking to set a new compliance date.  Finally, they argue again that in all events, the court should maintain the stay pending appeal.