The CFPB rule faces a possible freeze

a Consumer Financial Protection Bureau regulations that promised To save Americans billions of dollars in credit card delinquencies, a last-ditch effort to prevent its implementation awaits.

Led by the American Chamber of Commercethe card industry in March indicted the CFPB in federal court to prevent the new rule from going into effect.

That effort, that bounced between locations in Texas and Washington, D.C., is now about to reach a milestone: A judge in the Northern District of Texas is expected to announce Friday evening whether the court will grant the industry’s request for a freeze.

That could hold up regulation, reducing what most banks can charge in late fees to $8 per incident, just days before it was set to happen. coming into effect on Tuesday.

“We need to get clarity quickly on whether the rule can come into effect,” he said Tobin Marcusprincipal policy analyst at Wolfe Research.

The credit card regulation is part of President Joe Biden’s broader election war against what he sees as junk fees.

Major card issuers have steadily increased late fees since 2010, taking advantage of users with low credit scores who earn an average of $138 per card per year in fees. according to to CFPB Director Rohit Chopra.

As expected, the industry has mounted a campaign to derail the regulations, which it sees as a misguided effort redistributes costs those who pay their bills on time, and ultimately hurts those it claims to benefit by increasing the likelihood that users will fall behind.

It’s up for grabs $10 billion in fees per year that the CFPB estimates the rule could save American families by reducing late payment penalties from an average of $32 per incident to $8.

Card issuers included Capital One And Synchrony have already discussed efforts to offset the revenue shortfall they will face if the rule takes effect. They could do this by raising interest rates, adding new fees for things like paper statements, or changing who they lend to.

Capital One CEO Richard Fairbank said last month that, if implemented, the CFPB rule would impact his bank’s earnings for a “couple of years” as the company takes “mitigating measures” to generate revenue elsewhere.

“Some of these mitigation measures have already been implemented and are underway,” Fairbank told analysts during the company’s first-quarter earnings call. “We plan to take additional actions once we know more about the outcome of the lawsuit.”

Like some other Observers Marcus from Wolfe Research believes the Chamber of Commerce will likely prevail in its efforts to block the rule, either through the Northern District of Texas or the 5th Circuit Court of Appeals. If a preliminary injunction is granted, the rule could be upheld until the dispute is resolved, possibly through a lengthy process.

The industry group, which includes Washington, D.C.-based trade associations such as the American Bankers Association and the Consumer Bankers Association, filed its lawsuit in Texas because it is widely seen as a friendlier venue for businesses, Marcus said.

“I would be very surprised if [Texas Judge Mark T.] Pittman denies that order on the merits,” he said. “Somehow I think the implementation will be blocked before the rule would go into effect.”

The CFPB declined to comment and the Chamber of Commerce did not immediately respond to a request for comment.