“One thing we do know is that the size of the administrative state has become so large and so powerful that agencies are doing all kinds of things directly —  not just indirectly — to force action, and then intimidate and threaten more trouble if their desires aren’t met,” Gray told Townhall. “In this case, what you have is a stealth attempt to shut down businesses with no authority to do so. It’s easy enough to issue a warning, drop a hint, say something bad is going to happen to certain disfavored entities like these payday lenders to put these small borrowers out of business [with] no due process, no oversight, no jury if you will,  and no appellate judge to take an appeal.”

“One of the great achievements of the Trump administration is to really clamp down on the worst of this,” Gray says. “The Trump team deserves a lot of credit for looking through all of this and trying to end what are ultimately authoritarian tactics.”

Payday Lending Payday loans—short-term loans that operate as an advance on the borrower’s paycheck or other income—provide short-term credit to millions of American households.

This form of credit is especially important to minority and other vulnerable communities that are underbanked, because payday loans are more readily available than more traditional forms of credit and allow these underbanked individuals to bridge unexpected financial needs between income installments.

Payday loans are less costly than the informal credit systems on which many consumers must rely in the absence of payday advances, such as overdraft protection, bounced checks, and late bill payment fees.

Simply put, a payday loan is a convenient and reasonably-priced vehicle for short-term financial needs. Payday lenders rely on banking services to operate.

Like any other business, most payday lenders depend on banks for basic financial services such as the provision of lines of credit and the management of the outflow and inflow of money from accounts payable and receivable.

Critically, the basic payday lending business model also relies on banks to provide access to the Automated Clearing House (“ACH”) network and check-cashing services. When a prospective borrower applies for a payday loan, he or she typically provides a post-dated check or an electronic debit authorization for the value of the loan, plus a fee.

The lender Case immediately advances the customer funds, and then, after a specified period of time, the borrower returns to repay the loan and fee.

But if the customer does not return, the terms of the transaction permit the lender to deposit the post-dated check or to execute the debit authorization. In order to execute a debit authorization, the lender generally must have access to the ACH network, either directly or through a Third-Party Payment Processor (“TPPP”)—an entity that uses banking services to process payments for customers of its own.

While there are alternatives to ACH access—such as physically transporting cash to and from remote depository institutions via armored car—they all entail additional hassle for the customer or significantly higher transaction costs, and they have therefore proven not to be a viable method of operation over the long-term.

The reliance of payday lending on access to banking services—and, especially, the ACH network—is a critically important fact in this case. For Defendants, perceiving that access to banking services was the oxygen necessary to the payday lending industry’s survival, resolved to suffocate the industry by choking off this air supply.