Adam blogged earlier about Townstone but I wanted to say a bit more about what the case tells us about the CFPB’s authority concerning TILA and ECOA. As Adam noted, the Seventh Circuit cited Loper Bright and stated in note 15 that it approached the case “as presenting a question of statutory interpretation subject to our de novo review.” In the body of the decision, the court, citing 15 U.S.C. § 1691b(a), observed that “Congress vested the Board (and later the Bureau) with the authority to issue regulations ‘necessary or proper to effectuate the purposes of this title’ or ‘to prevent circumvention or evasion thereof.” And, the court wrote, citing 15 U.S.C. § 1604(a), “[t]his broad grant of authority was modeled after similar language found in the Truth In Lending Act (“TILA”).” The language “necessary or proper to effectuate the purposes of this title” sounds like it fits into the portion of Loper Bright which states that Congress can give agencies discretion and that in such situations, the court’s job is limited to making sure Congress has acted within its constitutional boundaries and the agency has engaged in reasoned decisionmaking, something we have discussed before.
In other words, while the court said it was approaching the issue de novo, it looks as if as part of that de novo decisionmaking, it also took into account the CFPB’s determination. This view finds support in the court’s conclusion that “Reading the statutory language as a whole, including the strong congressional direction that the cognizant agencies and the Department of Justice prevent ‘circumvention and evasion,’ makes clear that the prohibition against discouragement must include the discouragement of prospective applicants.” And that conclusion makes sense: after all, Congress has quite a bit of flexibility under the Constitution’s necessary and proper clause, and TILA’s and ECOA’s language is even less limiting because it says necessary or proper. It thus appears that after Loper Bright, courts evaluating TILA and ECOA regulations, as well as other regulations adopted under similar statutory language, should uphold the regulations under the Loper Bright discretionary delegation standard.
It will be interesting to see what the Fifth Circuit says about all this when it addresses it.
