The American Bankers Association today joined 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 in filing a lawsuit against the Consumer Financial Protection Bureau and Rohit Chopra in his official capacity as director of the CFPB. The litigation challenges the CFPB’s recent update to the Unfair, Deceptive, or Abusive Acts or Practices (UDAAP) section of the CFPB’s exam manual because it 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,” and it violates the APA’s procedural requirements because it constitutes a legislative rule that failed to go through notice and comment. The suit further challenges the CFPB by calling into question the Bureau’s funding structure.
In their filing, ABA and its co-plaintiffs make clear that the groups and their respective members fully support the fair enforcement of the nation’s nondiscrimination laws, yet “they cannot stand by while a federal agency exceeds its statutory authority, creates regulatory uncertainty, and imposes costly burdens on the business community. Especially when the CFPB did not even give the public an opportunity to raise concerns through the APA’s notice-and-comment process. 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.”
Today’s action follows a recent legal analysis ABA and other groups shared with the CFPB in June detailing how the Bureau’s actions exceed its legal authority. The analysis concluded that the new exam manual and related CFPB actions are “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,” said 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, is available on the ABA website.