Judge rules anti-discrimination efforts fall outside CFPB’s banking purview

The ruling involved a case between the CFPB, American Bankers Association, the U.S. Chamber of Commerce and other interest groups

The Consumer Financial Protection Bureau (CFPB) does not have broad authority to take on banking practices it sees as discriminatory, according to a new ruling from a federal judge, providing a victory for financial interest groups that challenged the Bureau.

The suit was filed against the CFPB nearly a year ago by the U.S. Chamber of Commerce, the American Bankers Association (ABA) and other state-affiliated financial interest groups in the Eastern District of Texas.

District Court Judge J. Campbell Barker, appointed by President Donald Trump to the bench in 2019, ruled that the Dodd–Frank Wall Street Reform and Consumer Protection Act, the 2010 law that gave rise to the CFPB, treats discrimination and fairness as separate concepts and bars the CFPB from enforcing an anti-discrimination policy against the plaintiffs.

The CFPB said it is exploring options for a potential appeal, according to Reuters. Federal law prohibits unfair or deceptive acts and practices (UDAAP) that cause consumers “substantial and unavoidable harm,” the CFPB said in a statement to the outlet.

“In our view, it is common sense that discrimination can meet that standard, regardless of whether it affects people due to their race, their national origin or the exercise of their religious liberties,” the agency told Reuters.

The ABA released a statement in support of the ruling.

“While ABA repudiates discrimination of any kind, it argued in the case that the bureau’s [UDAAP] authority cannot be used to extend the fair lending laws beyond the bounds set by Congress,” the ABA said in the statement.

ABA President Rob Nichols added that it is hopeful the Bureau takes a lesson from this ruling.

“We strongly support the fair enforcement of nondiscrimination laws, but the bureau’s extraordinary expansion of its regulatory reach crossed the line,” Nichols said. “We hope this ruling sends a clear message to the bureau and all federal regulators that they must operate within the boundaries set by Congress.”

The CFPB detailed in March of 2022 that it would take a closer look at the impacts of discrimination under its UDAAP authority as part of a broader anti-discrimination mandate detailed by the Biden administration. It has yet to bring any enforcement action related to its interpretation of that authority but in June said it was “looking into potential discriminatory conduct.”

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