American Bar Association’s Business Law Today May Month-In-Brief: Business Regulation & Regulated Industries
The CFPB issued a Fair Lending Report in May of 2022 (“Report”), in which it provided updates on its involvement with ongoing litigation, including its amicus program. The CFPB emphasized that its amicus program provides courts with its views and helps “ensure that consumer financial protection statutes are correctly and consistently interpreted.”
The CFPB highlighted a 2021 amicus brief that it jointly filed with the Department of Justice, Federal Reserve Board, and Federal Trade Commission in the case of Fralish v. Bank of America, where a consumer sued his bank for closing his credit card account without an explanation required by the Equal Credit Opportunity Act (“ECOA”). The amicus brief rebutted Bank of America’s argument that the ECOA only applies when consumers apply for credit. The brief contends that the ECOA’s protections against credit discrimination extend to all aspects of a credit arrangement. In other words, the ECOA’s protections apply regardless of whether the consumer is a current borrower or seeking credit. When providing examples of these protections, the CFPB noted that consumers have the right to an explanation when their credit application is denied, when an existing account is terminated, or when the account’s terms are unfavorably changed. The CFPB contends that “adverse action notices” discourage discrimination and help educate consumers about the reasons for a creditor’s decision. Although seeing the CFPB’s position was interesting, the case was dismissed by stipulation on January 28, 2022.
The CFPB also provided updates on two ongoing lawsuits against it. Specifically, in August of 2020, the National Community Reinvestment Coalition, among others, sued the CFPB in the U.S. District Court for the District of Columbia over its final rule amending Regulation C, which raised the loan-volume coverage thresholds for financial institutions reporting data under the Home Mortgage Disclosure Act (“HMDA”) (the “2020 HMDA rule”). Plaintiffs argue that the 2020 HMDA rule violates the Administrative Procedure Act. Also, in 2019, the California Reinvestment Coalition, among others, sued the CFPB in the U.S. District Court for the Northern District of California regarding the CFPB’s obligation to issue rules implementing section 1071 of the Dodd-Frank Act. In February 2020, the court approved a stipulated settlement agreement, which established a process for setting appropriate deadlines for a proposed and final rule implementing section 1071.
Reprinted with permission from the American Bar Association’s Business Law Today May Month-In-Brief: Business Regulation & Regulated Industries.
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