The CFPB’s regulation of payday lenders always has provoked heated arguments on both sides of the issue and the agency’s Tuesday announcement that it may reconsider its rule restricting lenders again fanned those flames.

“Republicans are once again giving payday loan sharks a reprieve at the expense of hardworking Americans,” said Rep. Maxine Waters (D-Calif.), ranking Democrat on the House Financial Services Committee. “This is unacceptable.”

The CFPB, led on an acting basis by Office of Management and Budget Director Mick Mulvaney, announced that it was considering revising the rule, which had been issued by then-director Richard Cordray.

That rule set restrictions on payday lending in an effort to ensue that consumers could repay their loans. Critics of the loans have said that the payday lending industry is filled with predatory lenders who often trap consumers in a cycle of debt, causing them to take out multiple loans.

“Rather than focus on keeping the government open, the Trump administration’s top budget expert is busy unraveling important consumer protections for payday borrowers,” said Sen. Sherrod Brown (D-Ohio), ranking Democrat on the Senate Banking Committee. “If he’s the head of both the CFPB and OMB, as this administration claims, he’s failing at both of his jobs.”

Notably, the CFPB rule carved out an exception for loans that conformed to the NCUA’s Payday Alternative Loan model.

Credit union officials said Tuesday that they hoped any new rule would continue to include the credit union provision.

However, the conservative Competitive Enterprise Institute said on Tuesday that the credit union exemption was unfair.

“The exemption appears designed to maintain market share for small banks and credit unions,” the institute said, in a report evaluating the payday loan rule. “But there is no reason to believe that these institutions are any better at serving small-dollar loan customers than large banks or specialist payday loan firms.”

The Washington, D.C.-based think tank went on to say that the CFPB failed to establish a reasonable justification for regulating small-dollar lending and disregarded vast amounts of empirical evidence demonstrating the need for such loans.

“Small-dollar loans may not be ideal for everyone, but they provide an important source of finance for millions of desperate consumers,” CEI concluded.

Representatives of the payday lending industry agreed.

“The Bureau’s rule was crafted on a pre-determined, partisan agenda that failed to demonstrate consumer harm from small-dollar loans, ignored unbiased research and data, and relied on flawed information to support its rulemaking,” said Dennis Shaul, CEO of the Community Financial Services Association of America.

However, consumer advocates charged that if Mulvaney weakened the rule, it would allow predatory lenders to victimize borrowers.

“The human devastation caused by payday loans, which average nearly 400 percent APR, has been extensively documented,” said Rebecca Borné, senior policy counsel at the Center for Responsible Lending. “For five years, the Consumer Financial Protection Bureau studied the issue, welcomed public input, and crafted a rule to help stop this debt trap.”

The center is an affiliate of the Self-Help Credit Union, a North Carolina financial institution.

“This move shows the level of influence that payday lenders have over Mick Mulvaney, who for years received campaign contributions while a member of Congress,” said the Stop the Debt Trap campaign, a coalition of more than 700 organizations. “With today’s announcement, Mulvaney is sending an unmistakable signal that he wants to kill this common-sense regulation.”

Meanwhile, Mulvaney’s appointment is being challenged in two lawsuits alleging that under Dodd-Frank, the Cordray-appointed deputy director, Leandra English is the rightful CFPB director. One suit, which remains pending in a New York federal court, was filed by the Lower East Side People’s Federal Credit Union.

English filed her own suit, asking that Mulvaney be removed from office. However, a federal judge in Washington, D.C. ruled that Mulvaney’s appointment was legal.

English has appealed that ruling and on Tuesday asked that the U.S. Court of Appeals for the District of Columbia to consider the appeal on an expedited basis.

“These disputes over President Trump’s unlawful appointment have enveloped the CFPB in a cloud of legal uncertainty,” her attorneys argued, adding, “There is an urgent public need for clarity as to the Acting Director position at the CFPB.”

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Reaction: CFPB Revisiting Payday Lending Rules 'Is Unacceptable'

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