The Independent Community Bankers of America (ICBA) and several other banking industry groups released a white paper on the Consumer Financial Protection Bureau’s (CFPB) actions to expand its examination of banks for discrimination.
The paper, “Unfairness and Discrimination: Examining the CFPB’s Conflation of Distinct Statutory Concepts,” concludes that the CFPB’s actions exceed its legal authority.
In the paper, the groups call on the CFPB to rescind the recent update of its examination manual and explain why the bureau lacks the legal authority to examine financial institutions for alleged discriminatory conduct under its “unfair, deceptive, and abusive acts or practices” (UDAAP) authority. The paper says the new manual and related CFPB actions are “contrary to law and subject to legal challenge,” as well as potential congressional action under the Congressional Review Act. The groups note that the bureau’s recent actions have “tremendous implications for consumers, for banks, and for financial markets at large.”
The ICBA, Consumer Bankers Association, American Bankers Association, and the U.S. Chamber of Commerce Center for Capital Markets Competitiveness jointly issued the white paper.
“It represents an enormous self-expansion of the CFPB’s authority that stands contrary to law and the intent of Congress,” the groups wrote in the white paper. “Such sweeping changes that alter the legal duties of so many are the proper province of Congress, not of independent regulatory agencies, and the CFPB cannot ignore the requirements of the Administrative Procedures Act and Congressional Review Act. The CFPB may well wish to ‘fill gaps’ it perceives in federal anti-discrimination law. But Congress has simply not authorized the CFPB to fill those gaps. If the CFPB believes it requires additional authority to address alleged discriminatory conduct, it must obtain that authority from Congress, not take the law into its own hands. The associations and our members stand ready to work with Congress and the CFPB to ensure the just administration of the law.”
They add that Congress has never used two statutory concepts, “unfairness” on the one hand and “discrimination” on the other, interchangeably, according to the white paper. However, they say the CFPB conflated the concepts by announcing via a UDAAP exam manual update that it would begin examining financial institutions for alleged discriminatory conduct that it deemed to be “unfair” under its UDAAP authority.