A District Court judge in Texas has granted the plaintiffs’ motion for summary judgment in a lawsuit filed against the Consumer Financial Protection Bureau that accused the Bureau of overstepping its authority when it warned companies about engaging in activities that could be found to be discriminatory in an update to its supervisory manuals.
A copy of the ruling in the case of Chamber of Commerce et al. v. Consumer Financial Protection Bureau et al. can be accessed by clicking here.
In March of 2022, the CFPB announced it was updating its supervisory manuals to make sure those supervising and examining companies in the financial services industry were on the lookout for situations where individuals may be discriminated against, including those with debts in collection. Instances of discrimination could be found to be violations of the Unfair, Deceptive, and Abusive Acts or Practices (UDAAP) under the Consumer Financial Protection Act.
The plaintiffs filed suit against the CFPB, claiming there are other agencies and statutes designed to eliminate discrimination and disparate impact. The funding structure of the CFPB also warranted vacating the new initiative, the plaintiffs alleged because it violated the Appropriations Clause of the Constitution — which the Supreme Court is going to hear arguments on next month.
The CFPB argued that the suit should be dismissed because it was shielded by sovereign immunity bestowed upon the federal government and because the plaintiffs lacked standing to sue, but Judge J. Campbell Baker of the District Court for the Eastern District of Texas disagreed.
Judge Baker ruled that any attempt by the CFPB to use the updated supervisory manuals in examinations or enforcement orders against any member of the plaintiff’s organizations would be unlawful. The judge also set aside the update so it can’t be used going forward.
