Over at the Consumer Finance Monitor blog, Alan Kaplinsky has questioned the legal authority for President Trump’s Executive Order barring so-called debanking; that is, when banks close bank accounts based on someone’s political views. The blog post argues that to the extent that the EO is based on the CFPB’s and FTC’s unfairness powers, it fails just as the CFPB’s effort to block discrimination based on race, etc., failed, according to Judge Barker’s ruling in Chamber of Commerce v. CFPB for the Texas federal court, as a violation of the major question doctrine.
I disagree about whether the issue presents a major question, for many but not all the same reasons as I wrote about in my article criticizing Judge Barker’s ruling, Is Discrimination Unfair? I don’t think it’s a coincidence that the Chamber of Commerce brought its case in a court in which both judges had been named by President Trump.
Alan also expresses the view that the CFPB’s and FTC’s views on this matter would not be entitled to deference after Loper Bright overturned Chevron; I think that’s also wrong because Loper Bright expressly said that when a statute delegates discretionary authority to an agency, the courts must defer to the agency, within certain limits, and I believe that Congress did indeed delegate such discretionary authority to the agencies to give meaning to the word unfair, as I discuss in another recent article, Borrow Now, Protect Later.
The harder question, for me at any rate, is whether debanking for political purposes meets the requirements for unfairness: whether it causes substantial injury to consumers that they can’t reasonably avoid and that isn’t outweighed by countervailing benefits to consumers or competition. I think the argument for saying discrimination outlawed by traditional anti-discrimination statutes–race, gender, etc.–is unfair is very strong. This isn’t that kind of discrimination and so the argument is weaker. But weaker doesn’t necessarily mean you lose. I’m pretty sure Judge Barker would uphold this application of the unfairness power, notwithstanding his decision in Chamber of Commerce, but I wonder how other judges would see it.
