Seven trade groups have filed a lawsuit against the Consumer Financial Protection Bureau alleging the agency exceeded its statutory authority when it updated its exam manual.
The lawsuit, filed in the U.S. District Court for the Eastern District of Texas, targets the CFPB’s recent update to the Unfair, Deceptive, or Abusive Acts or Practices (UDAAP) section of its exam manual.
The lawsuit alleges overreach by claiming the agency is exceeding its statutory authority outlined in the Dodd-Frank Act and that the updated manual is “arbitrary” and “capricious.”
The lawsuit also claims the action violates the Administrative Procedure Act’s procedural requirements because it constitutes a legislative rule that failed to go through notice and comment. The litigation also raises questions about the CFPB’s funding structure.
“The CFPB’s decision to dramatically expand its regulatory reach without any input from the public was not authorized by statute and has significant implications for consumers, banks and the broader financial markets,” Rob Nichols, president and CEO of the American Bankers Association, said in a press release.
“This is a step we did not want to take, but it was a necessary step given the extraordinary actions of the CFPB,” Nichols added.
The lawsuit was filed by the ABA, U.S. Chamber of Commerce, Longview Chamber of Commerce, Texas Bankers Association, Independent Bankers Association of Texas, Texas Association of Business and the Consumer Bankers Association.