Payday, Vehicle Title, and Certain High-Cost Installment Loans; Ratification of Payment Provisions

Kathleen L. Kraninger
Bureau of Consumer Financial Protection
13 July 2020

[Federal Register Volume 85, Number 134 (Monday, July 13, 2020)]
[Rules and Regulations]
[Pages 41905-41906]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-14937]


=======================================================================
-----------------------------------------------------------------------

BUREAU OF CONSUMER FINANCIAL PROTECTION

12 CFR Part 1041


Payday, Vehicle Title, and Certain High-Cost Installment Loans; 
Ratification of Payment Provisions

AGENCY: Bureau of Consumer Financial Protection.

ACTION: Ratification.

-----------------------------------------------------------------------

SUMMARY: The Bureau of Consumer Financial Protection (Bureau), through 
its Director, is ratifying certain provisions of its November 17, 2017 
rule regarding payday, vehicle title, and certain high-cost installment 
loans.

DATES: This ratification is issued on July 13, 2020 and relates back to 
the Rule published on November 17, 2017.

FOR FURTHER INFORMATION CONTACT: Christopher Shelton, Counsel, Legal 
Division, at 202-435-7700. If you require this document in an 
alternative electronic format, please contact 
CFPB_Accessibility@cfpb.gov.

SUPPLEMENTARY INFORMATION:

I. Background

    The Bureau was established by the Consumer Financial Protection Act 
of 2010 (CFPA).\1\ Section 1011(c)(3) of the CFPA provided that the 
President may remove the Director of the Bureau only for inefficiency, 
neglect of duty, or malfeasance in office.\2\
---------------------------------------------------------------------------

    \1\ Public Law 111-203, title X, 124 Stat. 1376, 1955-2113 
(2010).
    \2\ 12 U.S.C. 5491(c)(3).
---------------------------------------------------------------------------

    The Bureau's rule regarding Payday, Vehicle Title, and Certain 
High-Cost Loan Installments (2017 Final Rule or Rule) \3\ contained two 
primary components: (1) Mandatory underwriting provisions requiring 
lenders to assess borrowers' ability to repay before making covered 
loans; \4\ and (2) payments provisions governing lenders' withdrawing 
payments for covered loans from consumers' bank accounts.\5\
---------------------------------------------------------------------------

    \3\ 82 FR 54472 (Nov. 17, 2017).
    \4\ 12 CFR 1041.4-1041.6, 1041.10, 1041.11, 1041.12(b)(1)-(3).
    \5\ 12 CFR 1041.2, 1041.3, 1041.7-1041.9, 1041.12(a), (b) 
introductory text, (b)(4)-(5), 1041.13.
---------------------------------------------------------------------------

    On June 29, 2020, the Supreme Court held in Seila Law LLC v. CFPB 
that the CFPA's removal provision violates the separation of powers.\6\ 
The Court further held that ``the CFPB Director's removal protection is 
severable from the other statutory provisions bearing on the CFPB's 
authority. The agency may therefore continue to operate, but its 
Director, in light of our decision, must be removable by the President 
at will.'' \7\ ``The only constitutional defect we have identified in 
the CFPB's structure is the Director's insulation from removal.'' \8\
---------------------------------------------------------------------------

    \6\ 591 U.S.--(2020) (slip op.).
    \7\ Id. at 3.
    \8\ Id. at 32.
---------------------------------------------------------------------------

    The Bureau is separately issuing a rule that rescinds the mandatory 
underwriting provisions of the 2017 Final Rule. That rule does not 
affect the separate payments provisions, and this ratification is 
independent of that rule.

II. Ratification

    The Bureau, through its Director, hereby affirms and ratifies the 
payment provisions \9\ of the 2017 Final Rule.
---------------------------------------------------------------------------

    \9\ 12 CFR 1041.2, 1041.3, 1041.7-1041.9, 1041.12(a), (b) 
introductory text, (b)(4)-(5), 1041.13.

---------------------------------------------------------------------------

[[Page 41906]]

    The Bureau's Director is familiar with the payment provisions and 
has also conducted a further evaluation of them for purposes of this 
ratification. Based on the Director's evaluation of the payment 
provisions, it is the Director's considered judgment that they should 
be ratified.\10\
---------------------------------------------------------------------------

    \10\ In ratifying the payment provisions, the Bureau ratifies 
the procedural steps that were necessary to issue the payment 
provisions, including the decision to propose the payment provisions 
for public comment. See 81 FR 47863 (proposed July 22, 2016).

    Dated: July 7, 2020.
Kathleen L. Kraninger,
Director, Bureau of Consumer Financial Protection.
[FR Doc. 2020-14937 Filed 7-10-20; 8:45 am]
BILLING CODE 4810-AM-P