ECONOMIC POLICY
Watchdog readies crackdown on predatory lending after Supreme Court win

More than a dozen lawsuits and investigations faced delays as the Consumer Financial Protection Bureau battled back a constitutional challenge over its funding.

By Tony Romm
May 17, 2024 at 2:18 p.m. EDT

The Consumer Financial Protection Bureau plans to restart its aggressive crackdown against payday lenders and other companies that offer high-cost, short-term loans to poor borrowers, after a Supreme Court ruling this week resolved a challenge to the federal agency’s authority to act.

The decision is expected to ease some of the persistent political and legal obstacles at the CFPB, where powerful financial firms had blocked regulations, jeopardized the bureau’s funding and used the uncertainty generated by their battle to ward off recent probes and punishments.

The dispute began in 2017, when the watchdog agency issued rules preventing payday lenders from offering expensive loans to low-income Americans who could not afford to pay the money back. Under President Donald Trump, the agency later eliminated some of those protections, but payday lenders still pressed forward with a lawsuit, which came to hinge on the bureau’s unique funding structure.

On Thursday, a Supreme Court majority found the funding system was constitutional, denying opponents a ruling that could have invalidated much of the CFPB’s past work. Rohit Chopra, the bureau’s director, said in an interview he planned to seize on that victory and advance a fuller agenda to combat predatory lending — while seeking to penalize those that had dodged accountability until now.

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By Tony Romm
Tony Romm is the economic policy and accountability reporter at The Washington Post. Twitter https://twitter.com/tonyromm