- Seven trade groups sued the Consumer Financial Protection Bureau (CFPB) and its director, Rohit Chopra, over a recent policy update aimed at combating discrimination in the banking sector, alleging that the change exceeds the agency’s statutory authority and violates procedures appropriate ways to develop notice and comment rules.
- In a March Update At the CFPB’s Unfair, Deceptive, or Abusive Acts or Practices (UDAAP) Section, the office said it would review the compliance of banks and other businesses with consumer protection rules to identify and eradicate discriminatory behavior that violates federal prohibitions against unfair practices, even in situations where fair lending laws may not apply.
- The groups called the updated manual “arbitrary” and “capricious” and a violation of the Administrative Procedure Act (APA) “because it constitutes a rule of law that has not been subject to of an opinion and comments”.
Overview of the dive:
The groups – the American Bankers Association (ABA), the United States Chamber of Commerce, the Longview Chamber of Commerce, the Texas Bankers Association, the Independent Bankers Association of Texas, the Texas Association of Business and the Consumer Bankers Association (CBA) – claim the CFPB should have sought feedback on a proposed rule before implementing such a change.
“CFPB’s decision to dramatically expand its regulatory reach without any public input was not authorized by law and has significant implications for consumers, banks and broader financial markets,” the chairman said and ABA CEO, Rob Nichols. said in a press release. “It’s a step we didn’t want to take, but it was a necessary step given the extraordinary actions of the CFPB.”
In the lawsuit, the trade groups said they fully support the fair application of non-discrimination laws, but said the CFPB created regulatory uncertainty and imposed costly burdens on businesses in the way it enacted the Politics.
“The intervention of this Court is necessary to ensure that the CFPB is accountable to legal restraints, the rule of law and the public as it pursues an aggressive agenda with profound implications for the US economy, plaintiffs and their members,” the groups argued in the lawsuit, filed in the U.S. District Court for the Eastern District of Texas.
The update to the CFPB exam manual has already been challenged by Senate Republicans.
At a hearing in April, Senate Banking Committee Prominent Member Pat Toomey, R-PA, lambasted the update and called the agency, under Chopra’s leadership, “more out of control than ever.” .
“He is once again pursuing a subversive far-left agenda by abusing – and overstepping – his authorities,” he said.
This month, Chopra pledged to push forward the agency’s new policy, along with several others that have come under Republican attack in recent months.
“We will continue to do our job, regardless of the false accusations against our staff,” Chopra said during a nonprofit address, according to the Wall Street Journal.