The Consumer Financial Protection Bureau is expected to go back to the drawing board on its payday lending rulemaking after a federal court rebuffed the agency's attempt to stop the small-dollar rule from going into effect.

Lawyers said the CFPB is likely to propose a narrow rulemaking that would only extend the regulation's compliance date, which would give the agency more time to promulgate an entirely new payday rule. The current payday rule was written under the CFPB's previous director Richard Cordray.

"The easiest thing for them to do would be to get the compliance date extended, since that's what is creating the pressure right now," said Alan Kaplinsky, Co-Practice Leader of Ballard Spahr's Consumer Financial Services Group. "It looks like they were counting on the litigation as a way to give them that breathing room and obviously the judge didn't go along with that."

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