What a recent DC Circuit decision could mean for final CFPB arbitration and payday rules

By | 2017-07-07T19:35:55+00:00 July 7th, 2017|0 Comments

There have been recent rumors that the CFPB will issue its final arbitration rule by the end of July. According to Ballard Spahr attorney Alan Kaplinsky, “that rumor appears to be gaining traction, with major industry trade group telling its members today that it expects the CFPB to issue a final arbitration rule ‘very soon.’”

There are also rumors that CFPB Director Richard Cordray will leave the Bureau in the fourth quarter of this year to run for governor of Ohio.

Because compliance with a final arbitration rule will not be required for approximately seven months after the rule is published in the Federal Register, there is a distinct possibility that compliance with a final arbitration rule would not required before the time that Cordray leaves the CFPB (if he were to step down by year-end).

In a blog post on the Consumer Finance Monitor, Kaplinsky asks whether a new CFPB Director appointed by President Trump could unilaterally stay the arbitration rule’s compliance date. Kaplinsky analyzes a decision handed down earlier this week by the DC Circuit in Clean Air Council v. Puitt, which raises questions about whether Cordray’s successor could suspend the arbitration rule’s compliance date. Here are a few highlights:

Based on the D.C. Circuit’s Clean Air Council decision, it appears that while a new CFPB Director could issue a NPRM to reconsider a final arbitration rule, he or she might be unable to unilaterally stay the final rule’s compliance date. Instead, it could be necessary for the new Director to propose a stay of the final rule pending its reconsideration that would be subject to notice and comment.

It is also possible that the CFPB will issue a final payday loan rule in the next few months. Since the CFPB stated in its proposed rule that a final rule would generally not become effective until 15 months after its publication in the Federal Register and Director Cordray’s term expires in July 2018, even if Director Cordray stays at the CFPB until the end of his term, a new CFPB Director should be in place before a final payday loan rule becomes fully effective. However, any stay of a final payday loan rule’s effective date by a new Director could similarly be subject to notice and comment.