“Although there may be other constitutional checks on Congress’ authority to create and fund an administrative agency, specifying the source and purpose is all the control the Appropriations Clause requires.” With these words, seven members of the Supreme Court upheld the constitutionality of the Consumer Financial Protection Bureau’s funding mechanism and forestalled the possibility that
Short-Term Loans
Supreme Court to Decide CFPB’s Validity
Less than three years after the U.S. Supreme Court reviewed the CFPB’s appointment structure, the bureau again finds itself before the Court in what could prove the most consequential case for the financial services industry in years. Four months ago, the Fifth Circuit Court of Appeals issued a decision in Community Financial Services Association of…
Fifth Circuit Court of Appeals Invalidates Small-Dollar Rule, Throws the Future of the CFPB Into Question
On October 19, 2022, the Fifth Circuit Court of Appeals issued its opinion in Community Financial Services Association of America, et al. v. CFPB (CFSA v. CFPB) invalidating the CFPB’s Payday, Vehicle-Title, and Certain High-Cost Installment Loans rule (Small-Dollar Rule). The three-member panel decision calls into question the future viability of the CFPB…
District Court Ruling Clears Way for Small Dollar Rule Compliance Date in June 2022
Yesterday, in Community Financial Services Association of America, Ltd. v. Consumer Financial Protection Bureau, a lawsuit involving implementation of the payment provisions of the Payday, Vehicle Title, and Certain High-Cost Installment Loans Regulation (the “Small Dollar Rule”), the district court ruled on the Consumer Financial Protection Bureau’s (CFPB) and the Community Financial Services Association’s…
Illinois Caps Consumer Loans at 36% Rate, Limiting Consumers’ Access to Credit
Last week, Illinois enacted the “Predatory Loan Prevention Act” (SB 1792), which would place a 36% rate cap on nearly all non-bank consumer loans. This act will essentially outlaw small-dollar loans in Illinois and may make ancillary products on auto loans, such as GAP insurance, unavailable for a large number of consumers. The act…
The Consumer Financial Protection Bureau Issues Statement Regarding Small Dollar Lending and Signals Return to Prior Policy
On March 23, 2021, the CFPB issued a brief statement highlighting its position regarding “consumer harms in the small dollar lending market” and likely future action to reverse the previous CFPB administration’s policy regarding the industry. The next day, the CFPB provided its Consumer Response Annual Report for 2020 to Congress, which stated the complaint…
New FAQ Responses to Small Dollar Rule Address Auto and Mortgage Lending, Payment Transfers and Notices Inclusion
On Tuesday, August 11, 2020, the CFPB issued a second round of answers to frequently asked questions related to the Small Dollar Rule. The FAQ responses range from addressing more nuanced provisions of the payment provision portion of the rule to the overall coverage of the rule.
Covered Loan Coverage
For the most part, auto…
Small Dollar Rule Stay Requested to Be Lifted in Recent Joint Status Report
With the Supreme Court’s recent decision in Seila Law and Director Kathleen Kraninger’s ratification of the payment provisions of the Payday, Vehicle Title, and Certain High-Cost Installment Loans Rule (the “Small Dollar Rule”), the CFSA and the CFPB have submitted a joint status report in the stayed case pending in the Western District of Texas.…
CFPB Rescinds Small Dollar Rule Ability to Repay Provisions However Payment Provisions Remain
On July 7, 2020, the Consumer Financial Protection Bureau (CFPB) issued its final rule in regard to so-called small dollar loans. The biggest change from the CFPB’s original iteration of the rule, the 2017 Payday, Vehicle Title, and Certain High-Cost Installment Loans Rule (“small dollar rule”) is the Bureau’s decision to rescind the ability to…
Joint Statement Issued by Federal Banking Regulators to Encourage (Yes, Encourage) Responsible Small-Dollar Lending in Response to COVID-19
Following previous guidance issued by (and in some cases withdrawn by) the OCC, CFPB, Federal Reserve, FDIC, and NCUA, the federal financial institution regulatory agencies published a joint statement on March 26, 2020, in response to COVID-19 “to specifically encourage financial institutions to offer responsible small-dollar loans to both consumers and small businesses.” The statement…