All right, let’s break this down in simpler terms. You’re in the small-dollar lending business, and there’s some legal stuff going on that could affect you. The CFPB, or Consumer Financial Protection Bureau, made a rule about small business lending. Some trade associations are telling the CFPB to hit the pause button on this rule because they think it’s creating unfair conditions for different lenders. They’ve written a letter to the CFPB’s head honcho, Director Chopra, to sort this out.

So, what’s the big deal?

1. Court Case and Preliminary Injunction: A court in Texas put a temporary hold on the rule but only for specific people who complained (plaintiffs). This means some lenders have to follow the rules, and others don’t. That’s confusing and not fair, right?

2. Trade Associations Step In**: A bunch of groups like the American Financial Services Association and the Mortgage Bankers Association, who represent lenders like you, are saying, “Hey, this is making it tough for us to know what to do. Can we please sort this out?”

3. Effective Dates and Compliance: The rule was supposed to come into play on specific dates, but now, with the court action and all, it’s a mess. The trade associations say, “Let’s delay this rule until we figure out all the legal stuff, which might not be until July 2024.”

4. What Can Happen Next: The CFPB has a couple of options. They could formally propose to delay the rule and allow people to give their thoughts for 30 days. Or, they could change their approach in the court case to apply the hold on the rule for everyone, not just the folks who complained.

5. Efficiency and Litigation: The trade associations think that if the CFPB doesn’t make things clear, more people will go to court, and that’s just a waste of time and money for everyone.

All Show, No Go: Trade Associations Do the Macarena While Plaintiffs Tango with CFPB!

Whether trade associations should help pay the plaintiffs’ legal fees in a case fighting against the CFPB’s regulations is nuanced. From a legal and strategic perspective, there are pros and cons to consider:

Pros:

1. Strength in Numbers: Combining resources could help create a more vigorous fight against the CFPB, potentially making the injunction more likely to apply to a broader group, not just the initial plaintiffs.

2. Unified Message: By financially supporting the plaintiffs, the trade associations could help ensure that the legal arguments are aligned with their members’ best interests.

3. Public Relations: It might create positive PR for the trade associations, as they could publicly argue that they are fighting against confusing or unfair regulation that affects their members.

4. Resource Pooling: Legal battles are expensive. They can help sustain a lengthy fight if needed by contributing to the legal fees.

5. Broader Impact: A win in court against the CFPB could benefit all members of the trade associations, not just those who are plaintiffs. It could be seen as an investment in the broader business environment for their industry.

Cons:

1. Cost: Legal battles can be costly and time-consuming. This would be an additional cost for trade associations and, by extension, their members.

2. Risk of Loss: If the case is lost, it could set a negative precedent for the industry, and the resources spent on legal fees would be a sunk cost.

3. Divergent Interests: While the plaintiffs and the trade associations may have similar objectives, they might not have the same goals. Financially supporting the plaintiffs could limit the trade associations’ control over the litigation strategy.

4. Member Backlash: Some members might not agree with the legal action and could resent their fees being used in this manner.

5. Regulatory Scrutiny: Actively fighting against a regulatory agency could attract more scrutiny to the trade associations and their members, potentially leading to stricter regulations in the future.

So, would it have been smart? It depends on a variety of factors, including how aligned the trade associations are with the plaintiffs, the potential benefits vs. the risks, and the appetite for a potentially lengthy and expensive legal battle.

So, what does this mean for you, my lender friend? Keep an eye on this situation. Depending on how the CFPB and the courts decide, you might have more time to adapt to the new rules, or you may need to make quick changes to how you do business.