CFPB drops UDAAP guidance appeal

In a major win for Texas banks and their customers, the Consumer Financial Protection Bureau (CFPB) has officially withdrawn its appeal in the lawsuit challenging the agency’s attempt to rewrite federal law through a backdoor update of its examination manual. The Texas Bankers Association has been a co-plaintiff in this case.

The voluntary dismissal—filed jointly by all parties on April 30 in the U.S. Court of Appeals for the Fifth Circuit—marks the end of a high-stakes legal battle that began nearly three years ago when the CFPB under prior leadership unilaterally revised its exam manual to assert a sweeping new interpretation of “unfair” practices under the Dodd-Frank Act, specifically as it relates to disparate impact in fair lending enforcement.

TBA President and CEO Chris Furlow made the following statement:

“Today, the new CFPB leadership and its counsel agreed to what bankers have known for the past three years: the overnight ‘update’ of the agency’s exam manual relating to disparate impact was beyond the scope of its statutory authority and illegal in the way it was delivered.

Put plainly, this is further recognition that the previous Administration’s CFPB leadership failed to follow the Administrative Procedure Act—they failed to follow the law. We are grateful that the new CFPB leadership is turning the page on unaccountable regulatory over-reach.

Government agencies must abide by the federal laws that govern their existence and operations, and today’s action by the new CFPB is a recognition of that basic – but fundamental – tenet of administrative law.”