Fallout from the CFPB’s “pause”

As Adam reported yesterday, the CFPB has gone dark. One place this is playing out is the courts. Yesterday, the Fifth Circuit was scheduled to hear two oral arguments. In one, Chamber of Commerce v. CFPB, which raises the issue of whether discrimination is unfair within the meaning of the CFPB’s UDAAP statute (disclosure: I co-authored an amicus in the case), the oral argument lasted less than three minutes, did not address the merits, and concluded with an agreement that the parties would confer. In the other, Texas Bankers v. CFPB, a challenge to the Bureau’s small business loan reporting rule, the Fifth Circuit heard the argument from the industry but the CFPB lawyer did not argue. The court said it would proceed as it thinks best. Meanwhile, Law360’s Jon Hill quotes Elizabeth Warren as saying “Secretary Bessent just sent a signal to giant corporations and big banks that it is open season to cheat, trick, and trap hard-working American families.”

According to Kate Berry, reporting in the American Banker, the pause includes suspending the effective dates of all rules which have been finalized but not yet become effective. Under Humane Soc’y of the United States v. United States Dep’t of Agric., 41 F.4th 564 (D.C. Cir. 2022), that seems to violate the Administrative Procedure Act, in the absence of an additional notice-and-comment rulemaking, though nearly all administrations do the same thing to pending regulations when taking office.

It must be very demoralizing to take a job to help consumers only to be told your efforts are on pause. It is certainly not good for consumers and hard to reconcile with the Bureau’s mission. I fear what we will hear in the days to come.

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