Chamber sues CFPB over its anti-discrimination policy
The Chamber of Commerce and some business groups filed a lawsuit Wednesday against the Consumer Financial Protection Bureau over a new policy that targets discrimination in the financial sector.
Why it matters: The lawsuit, which claims the agency is overstepping its authority, is among the first to argue against a federal regulator by pointing to a recent Supreme Court ruling, West Virginia v. EPA, in which the court's conservative majority sharply limited the authority of the environmental agency to regulate carbon emissions.
- The consumer agency's policy is also an example of how federal regulatory agencies have tried to more aggressively combat race discrimination in the wake of the 2020 racial protests, the NYT notes.
- Co-plaintiffs include the American Bankers Association and Consumer Bankers Association.
Catchup quick: The CFPB announced its new "unfair discrimination" policy back in March, part of an update to its "exam manual," which helps banks understand regulations.
- The gist was that the agency will consider whether financial institutions are discriminating against customers, intentionally or otherwise. "Consumers can be harmed regardless of whether it is intentional," the agency said in a release.
- The CFPB had no comment on the lawsuit, but said in a statement to Axios that its policy was to help financial institutions "ensure they are following the law, and help make certain that consumers are receiving the fair and equitable treatment they deserve.”
What they're saying: "The CFPB decided to act despite the fact that Congress did not give them the authority to act, particularly in light of the West Virginia EPA case," Tom Quaadman, an executive vice president at the Chamber, told Axios.
- In its lawsuit, the Chamber emphasized that it is not in favor of discrimination, but that the agency doesn't have the explicit authority to police that kind of conduct.
- The CFPB, under Dodd-Frank, is explicitly tasked with making sure financial institutions treat consumers fairly — that would include ensuring that they don't discriminate, consumer advocates told Axios.
- "It just strikes me as so obvious that racial and gender discrimination is unfair," said Christopher Lewis Peterson, a law professor at the University of Utah, who worked at the agency during the Obama administration. "It surprises me that banking industry lobbyists struggle with that question."
What to watch: The lawsuit also alleges that the CFPB's funding mechanism is unconstitutional.
- Going after its funding could be an even bigger deal than the fight over the discrimination policy, said Peterson. "It's just the latest in a long line of attacks trying to weaken the CFPB."