A year for fighting back
CFPB is an agency that demands accountability from everyone but itself.”
The year 2022 will be remembered for the aggressiveness of Biden Administration regulators to target the banking industry. From Dodd-Frank legacy regimes such as burdensome Sec. 1071 small business reporting proposals to laying the groundwork for bank climate regulation. But it can also be remembered as a year for fighting back against a particular Federal regulatory agency that believes it is above the law.
In September, TBA sued the Consumer Financial Protection Bureau (CFPB) along with the American Bankers Association, U.S. Chamber of Commerce, the Consumer Bankers Association and several Texas industry and business colleagues including IBAT, the Longview Chamber of Commerce, and the Texas Association of Business. Resorting to litigation is never the most desirable first choice. So, I want to share why this action was necessary.
CFPB is an agency that demands accountability from everyone but itself. Time and time again, it oversteps its authorities, circumvents established rulemaking procedures and predetermines regulatory outcomes regardless of the facts. For example, the Request for Information (RFI) on fees such as overdraft protection were already deemed “junk fees” by the CFPB’s leadership. The agency clearly had a politically motivated, pre-determined position and was not interested in a genuine solicitation for comments or ideas.
There are many issues on which CFPB could be challenged. So why the UDAPP issue? If a particular group in a community uses or accesses different bank products or services, the CFPB could determine, using disparate impact analyses, that a bank was discriminating against that group or another group that did not use the same services. CFPB even says it doesn’t matter if there is intent or not. Translation: CFPB is empowering themselves with broad authorities to target businesses and banks that don’t meet with their political favor. And, what’s lost in this discussion is the fact that the CFPB’s unlawful expansion of its UDAAP authority will actually have a chilling effect on banking and business in general. More importantly, it will harm community interests. It will result in fewer services being offered to a variety of customers with broad-ranging needs.
Shouldn’t there at least be a genuine public dialogue about the impacts of such an important policy change? Unfortunately, legitimate counterpoints and data are irrelevant to a politicized agency that believes it is untouchable. This was demonstrated by CFPB’s failure to follow the notice-and-comment process of the Administrative Procedures Act regarding revisions to its UDAAP guidance. This constitutes one of the major points of our suit.
Currently, Congress is limited in performing oversight because CFPB funding — by Sen. Elizabeth Warren’s design — are drawn outside of the appropriations process. Another lawsuit against the agency has made progress in challenging CFPB on its funding (see John Heasley’s commentary on page 42). But until there is certainty, TBA will continue to press for CFPB accountability through Congress and the courts.
CPFB is a government agency that is not accountable — not even to the people’s representatives.
How un-American is that? It’s why we fought back in 2022 for meaningful reforms, and we will continue to do so in 2023.