A lawsuit heading to the United States Supreme Court might make dramatic changes to the regulation of financial institutions. That might help so-called predatory lenders in Virginia.
Attorney General Jason Miyares is signing on in support of a lawsuit challenging the constitutionality of the Consumer Financial Protection Bureau. The lawsuit calls into question the funding model, which finances regulation of industries with money that comes from the industries that are regulated.
Carl Tobias at the University of Richmond Law School says the Supreme Court might be inclined to side with business interests rather than consumers.
"People who care about consumers sometimes are concerned that the fees charged by payday lenders are so substantial,” Tobias says. “And so, why is the attorney general then favoring the payday lenders over everyday consumers, if you will?"
In a press release announcing his brief in support of the payday lenders, the attorney general says the way the Consumer Financial Protection Bureau was set up "casts separation of powers to the wind and avoids any real accountability."
Jay Speer at the Virginia Poverty Law Center says if the Supreme Court sides with Miyares, it could have a dramatic influences here in Virginia.
"It would potentially call into question the funding mechanism for many other agencies, including state agencies like the Bureau of Financial Institutions, which enforces the Virginia Fairness in Lending Act, the rules that govern mortgages, consumer finance companies, all sorts of different companies,” Speer says. “They enforce the law."
Oral arguments in the case are expected this fall.
This report, provided by Virginia Public Radio, was made possible with support from the Virginia Education Association.
