BEAUMONT, Texas—A federal judge in Texas has granted summary judgment to the American Bankers Association, the Texas Bankers Association, the U.S. Chamber of Commerce and several other co-plaintiffs in their challenge to the CFPB’s UDAAP exam manual.
In the case the plaintiffs are alleging the Bureau “unlawfully” expanded the statutory definition of “unfairness” to encompass discrimination.
“In a sharp rebuke of the agency, the judge issued a final judgment setting aside the CFPB’s March 2022 interpretation of its UDAAP authority,” the ABA Banking Journal reported.
The court granted additional protection to the plaintiffs’ members by issuing a final judgment prohibiting the CFPB from “pursuing any examination, supervision, or enforcement action against any member of a plaintiff organization based on the CFPB’s interpretation of its UDAAP authority,” according to the Journal summation of the ruling.
ABA Expresses Support
“While we’re still reviewing the final judgment and its full implications, we’re pleased with today’s U.S. District Court ruling that makes clear the CFPB exceeded its statutory authority when it ‘updated’ its exam manual and announced an open-ended and novel power to examine banks for alleged discriminatory conduct,” ABA President and CEO Rob Nichols said.
The ABA further noted the judge upheld the trade group’s challenge to the exam manual on the grounds that it was the product of an unconstitutionally funded agency.
Violation of Constitution
Texas is covered by an appellate court ruling, currently being appealed to the Supreme Court, that found the bureau’s funding violates the Appropriations Clause of the Constitution, the ABA Banking Journal said.
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