The U.S. Chamber of Commerce and three bank trade groups are calling for the Consumer Financial Protection Bureau to rescind a new policy that seeks to identify and root out discrimination in all consumer financial products.
Four trade groups sent letters Tuesday to CFPB Director Rohit Chopra asking him to reverse the anti-discrimination policy enacted in March.
Under the new policy, the CFPB for the first time said that discrimination on the basis of age, race, sex and other factors — regardless of intent — violates the federal prohibition on “unfair, deceptive or abusive acts or practices," known as UDAAP.
The CFPB
The American Bankers Association, Consumer Bankers Association and Independent Community Bankers of America and the Chamber released
The Chamber called the policy “unlawful,” because the bureau did not provide any notice-and-comment schedule as required by the Administrative Procedure Act.
The Chamber also launched a six-figure ad campaign Tuesday alleging that Chopra “has no accountability,” and is engaged in a “radical agenda and reckless approach,” in which he “changes rules by fiat.”
The trade groups said the CFPB exceeded its authority by extending fair-lending laws beyond the bounds set by Congress.
The policy change marked a significant departure from anti-discrimination practices in the past that traditionally have focused almost exclusively on mortgage lending. Congress has passed laws outlawing discrimination in housing, credit and employment — but not in all financial products.
The Chamber said the CFPB’s policy opens the door to “uncertain and excessive regulation in the financial marketplace.”
“The business community strongly supports effective anti-discrimination policies and adherence to the laws prescribed by Congress,” wrote Daryl Joseffer, executive vice president and chief counsel at the U.S. Chamber Litigation Center.
Under the 1974 Equal Credit Opportunity Act, a civil rights law that bans discrimination against credit applicants, the CFPB is limited to addressing discrimination in lending. But under the new standard, the bureau said discriminatory practices may also trigger liability under the Consumer Financial Protection Act, which prohibits UDAAP violations.
“Applying the UDAAP to discriminatory conduct would thus provoke confusion — for both consumers about their rights and regulated entities about their responsibilities,” Joseffer wrote. “Such confusion would inject uncertainty into the financial services industry and make it nearly impossible for them to be confident that the products and services they offer to consumers adhere to the CFPB’s arbitrary and malleable definition of “unfair.”
