CBA Statement on U.S. District Court Ruling Challenging Legality of CFPB’s UDAAP Manual Changes

WASHINGTON, D.C. – Consumer Bankers Association (CBA) President and CEO Lindsey Johnson tonight released the following statement after the U.S. District Court for the Eastern District of Texas granted CBA and other plaintiffs’ motion for summary judgment, and denied the counter-motions by the Consumer Financial Protection Bureau (CFPB), in a case against the CFPB challenging the legality of changes made by the agency last year to the Unfair, Deceptive, or Abusive Acts or Practices (UDAAP) examination manual. In granting CBA and the other plaintiffs’ motion, the court deemed the CFPB’s March 2022 update to the UDAAP exam manual beyond the agency’s constitutional and statutory authority, and in its final judgment vacated that update. 

“Today’s ruling is a clear affirmation of CBA’s long-held belief that the CFPB exceeded its statutory authority outlined in the Dodd-Frank Act by seeking to punish banks for perceived discrimination even without evidence of discriminatory intent. We appreciate the Court’s recognition that changes made by the Bureau to the UDAAP Exam Manual stand contrary to law and the intent of Congress. As we have conveyed, these actions were especially concerning given that they were taken without industry input and outside of the rulemaking process required by the Administrative Procedure Act.  

“Our members firmly oppose discrimination in any form and strongly support fair, objective, and transparent enforcement of civil rights and fair lending laws. At the same time, we must also recognize the Bureau’s unilateral decision to expand its UDAAP authority has threatened banks’ ability to deliver the products and services millions of Americans rely on to meet their financial needs. Moving forward, America’s leading banks remain fully committed to working with the Bureau on any concerns and initiatives to ensure a fair and just financial system. Accordingly, we urge the agency to introduce policy considerations using proper procedure.” 

Background 

The U.S. District Court for the Eastern District of Texas’ final judgment declared that “the pursuit of any examination, supervision, or enforcement action against any member of a plaintiff organization based on the [CFPB’s] interpretation of its UPAAP authority” under the March 2022 Exam Manual “unlawful as exceeding statutory authority and as based on unconstitutional funding.” The full final judgment can be found HERE.     

CBA Advocacy  

• In February and March 2023, CBA President and CEO Lindsey Johnson authored op-eds calling for CFPB oversight and reform, particularly as it relates to its misguided views on its UDAAP authority. You can read the op-ed in American Banker HERE and RealClear Markets HERE.
• In September 2022, CBA and other trade associations filed a lawsuit challenging the CFPB’s changes to the UDAAP Exam Manual on several grounds, including the agency’s lack of statutory authority and failure to follow appropriate policymaking procedure. You can read the lawsuit HERE.
• In June 2022, after CFPB attempted to extend its UDAAP authority without legislative authority, CBA and other trade associations authored a white paper calling on the Bureau to rescind its decision. You can read the white paper HERE.