The U.S. Chamber of Commerce has joined several business organizations in suing the Consumer Financial Protection Bureau (CFPB), saying the agency is overstepping its bounds in new rules that deal with discrimination in banking.
According to a chamber news release Wednesday (Aug. 28), the suit — filed in the Eastern District of Texas — challenges the CFPB’s recent amendment to the Unfair, Deceptive, or Abusive Acts or Practices (UDAAP) section of its examination manual to include discrimination, and in particular, disparate impact.
The complaint argues that Congress has not given CFPB the authority to make such changes without public hearing, noting the handling of other discrimination and fairness changes handled by other agencies through laws like the Equal Credit Opportunity Act, the Fair Housing Act and the Home Mortgage Disclosure Act.
The group of six plaintiffs have asked a judge to “intervene to ensure the CFPB is held accountable to the rule of law and consumers” thus making sure “consumers are protected and have access to financial products they rely on.”
The CFPB said it had no comment on the specifics of the lawsuit. A spokesperson for the bureau provided PYMNTS with this statement:
“The CFPB is one of the most transparent regulatory agencies, and voluntarily publishes exam manuals laying out how it will assess banks’ compliance with the federal laws Congress charged the Bureau with enforcing. The CFPB’s exam manuals allow banks to ensure they are following the law, and help make certain that consumers are receiving the fair and equitable treatment they deserve.”
Related: CFPB Boosts Protections to Eliminate Consumer Finance Discrimination
The chamber says that changes to the UDAAP could lead to “the disappearance of products consumers currently enjoy and benefit from,” such as no-fee checking accounts, as the regulator’s proposed “disparate impact analysis” could determine that no-fee policies for customers with bigger bank balances amounts to age discrimination against younger customers, lawyers contend.
“The CFPB is pursuing an ideological agenda that goes well beyond what is authorized by law and the Chamber will not hesitate to hold them accountable,” said U.S. Chamber Executive Vice President and Chief Policy Officer Neil Bradley.
Read more: Businesses Voice Concern Over Impact of Biden’s Regulatory Push
The CFPB’s anti-discrimination efforts include updates in March to its supervisory operations that were designed to protect against unfair practices at banks and companies.
“When a person is denied access to a bank account because of their religion or race, this is unambiguously unfair,” CFPB Director Rohit Chopra said at the time, adding that the bureau would expand its anti-discrimination efforts to fight discriminatory in consumer finance.
PYMNTS reported earlier this year that the Biden administration would step up its regulatory efforts, leading to a lobbying pushback from business groups.
Ken Spain, an industry strategist, said that there is “growing concern within the business community that there has been a rush to regulate without fully factoring in the negative effects on industry and the economy.”
“With the election year upon us and the administration’s agenda stalling, the pace is expected to accelerate,” he said.
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