Legal Experts: Payday Lenders Struggle in Supreme Court Hearing

Lawyers weigh in on court case that could defund consumer regulator

A group of legal experts said representatives of the payday lending industry faced a tough day in front of the Supreme Court as the body heard oral arguments in a case that could determine the fate of the Consumer Financial Protection Bureau (CFPB).

The lawyers listened to the arguments and questioning from Justices and said it seemed the Court was skeptical of the position advanced by the Consumer Financial Services Association, an industry group representing payday lenders.

“Today was a bad day for predatory payday lenders and the Wall Street lobby groups that lent their names to some very ridiculous claims,” said Elyse Hicks, consumer policy counsel at Americans for Financial Reform. “None of their legal arguments passed the red-face test, and even the questions from the conservative justices reflected that reality.”

One expert noted that counsel for the payday lenders seemed to be redundant, but not effective.

Rachel Fried, senior counsel at Democracy Forward said, “Repeating an argument over and over again doesn’t make it right, and the Fifth Circuit got it wrong. That was clear in the oral arguments today.”

Another legal expert said there is danger for other agencies if the Court rules in favor of the payday lending industry in this case. He further stated that the failure to limit the scope of any decision to the CFPB could spell trouble for those advocating defunding the agency.

Chris Peterson, the John J. Flynn Endowed Professor of Law at the University of Utah, said, “The payday loan companies were unable to identify any manageable standard or principle to limit this attack to only the CFPB. All of the regulations, audits, and law enforcement actions of the Federal Reserve, the FDIC, the National Credit Union Administration as well as Social Security and Medicare are going to be challenged next in a mud slide of cases if the Roberts Court strikes down CFPB funding.”

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