Payday industry officials and consumer advocates expect the Consumer Financial Protection Bureau to finalize sweeping new regulations on payday loans in the next few weeks.
Several payday industry lobbyists say they anticipate that Director Richard Cordray, an Obama appointee, will finalize the rule before leaving Washington to run for governor of Ohio, and will do so possibly before Labor Day.
For now, those expectations are based on rumors and speculation. Cordray, whose term runs until next summer, has not said that he will run for governor, and the bureau has not indicated that it is ready to finalize the rule, which was proposed in June 2016. The bureau did not respond to requests for comment.
Even so, the prognosis for the rule, which payday lenders say would decimate their industry, is much better than it was just months ago. In the wake of President Trump's victory, Republicans hoped they could stop the rule. Failing that, they suggested that it could be reversed through the Congressional Review Act, which they have used to cancel more than a dozen of the rules issued late in former President Barack Obama's term.
Now, though, consumer advocates who have fought for years for federal regulations on payday and auto title loans are eager to see Cordray finalize the rule, and believe that it will hold up despite opposition from a unified GOP government.
"If some members of Congress want to have a fight about a rule that is as just as a rule against loan sharks, we'd be glad to have that fight," said Gynnie Robnett, the payday campaign director for Americans for Financial Reform, a group deeply involved in the push for payday rules.
The rule's advocates draw encouragement from the apparent viability of another major rule from the bureau. Last month, the agency finalized a rule that would prevent banks from including clauses in contracts that steer customers to private arbitration rather than class-action suits. A Congressional Review Act challenge to the rule sailed through the House but hasn't moved in the Senate.
Consumer groups reckon that the payday rule, which would affect a much smaller swath of the industry, has even better odds than the arbitration rule.
"We'll be in an even stronger position to defend the payday loan rule," said Lauren Saunders, associate director at the National Consumer Law Center.
Speaking at a press conference on the arbitration rule before leaving for Congress' August recess, House Minority Leader Nancy Pelosi said she hoped that Cordray would produce a rule and wouldn't let the threat of a CRA challenge stand in the way.
The idea of regulating payday lenders generally has strong support among the public. Saunders cited a referendum in South Dakota last year in which more than three-quarters of voters approved setting a cap on interest rates, effectively banning payday loans.
The CFPB cannot directly regulate interest rates, but proposed preventing borrowers from falling into "debt traps" by requiring that lenders offering small, short-term loans document borrowers' ability to repay the loans or else limit them from taking out successive loans. Alternatively, lenders could offer longer term loans that met certain specifications.
Robnett said that her group has called on the bureau repeatedly to strengthen those proposed rules by requiring that that lenders verify borrowers' ability to repay in all circumstances.
Dennis Shaul, the head of the Community Financial Services Association of America, which represents payday lenders, said several provisions of the rule were not workable and faulted the agency for not listening to business owners or payday borrowers. Hundreds of thousands of comments have been filed to the CFPB on both sides. At this point, though, the bureau is likely done listening and ready to finalize a rule, Shaul said, with the only question being whether its lawyers have finished reviewing it.