Bankers Sue CFPB, Claim Abuse of Power
A coalition including bankers alleges that the national consumer bureau illegally expanded its regulatory reach in creating and enforcing national fair-housing rules.
WASHINGTON – The American Bankers Association (ABA) joined a coalition of groups filed a lawsuit against the Consumer Financial Protection Bureau (CFPB) and Rohit Chopra in his official capacity as director of the CFPB. In addition to ABA, the group includes the U.S. Chamber of Commerce, Longview Chamber of Commerce, Texas Bankers Association, Independent Bankers Association of Texas, Texas Association of Business and the Consumer Bankers Association.
The litigation challenges CFPB’s recent update to the Unfair, Deceptive, or Abusive Acts or Practices (UDAAP) section of the CFPB’s exam manual. It claims CFPB exceeds its statutory authority and violates the Administrative Procedure Act (APA) in three ways:
- The Bureau is exceeding its statutory authority outlined in the Dodd-Frank Act.
- The updated manual is “arbitrary” and “capricious.
- It violates the APA’s procedural requirements because it constitutes a legislative rule that failed to go through notice and comment.
The suit also calls into question the CFPB’s funding structure.
In the filing, ABA and the coalition say they fully support fair enforcement of the nation’s nondiscrimination laws – but they “cannot stand by while a federal agency exceeds its statutory authority, creates regulatory uncertainty, and imposes costly burdens on the business community.”
They also says CFPB didn’t give them – or the public – a chance to raise their concerns through a usual public-comment period.
“This Court’s intervention is needed to ensure that the CFPB is accountable to legal constraints, the rule of law, and the public as it pursues an aggressive agenda with far-reaching implications for the American economy, Plaintiffs, and their members,” according to the lawsuit.
In June, ABA says it gave its recent legal analysis to the CFPB and other groups shared details about ways CFPB exceeded its legal authority, “contrary to law and subject to legal challenge.”
“The CFPB’s decision to dramatically expand its regulatory reach without any input from the public was not authorized by statute and has significant implications for consumers, banks and the broader financial markets,” says ABA President and CEO Rob Nichols. “This is a step we did not want to take, but it was a necessary step given the extraordinary actions of the CFPB.”
The lawsuit, filed in the United States District Court for the Eastern District of Texas, can be downloaded though ABA’s website.
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