In what comes as a significant blow to the Consumer Financial Protection Bureau (CFPB), the U.S. District Court for the Eastern District of Texas has issued a decisive ruling on September 8, 2023. This judgment has effectively vacated a crucial anti-discrimination update from March 2022 to the Unfair, Deceptive, or Abusive Acts and Practices (UDAAP) section of the Bureau’s Supervision and Examination Manual (Exam Manual).
The court declared the CFPB’s funding structure unconstitutional, contending that the Bureau had exceeded its statutory UDAAP authority. It even went beyond this ruling to declare any effort by the CFPB to pursue future matters under the same context as unlawful. This turning point marks a significant setback for the Bureau and its regulatory effectiveness.
The ruling is likely to have more profound implications. It could set a precedent for other courts considering the extent of regulatory agencies’ power, thereby impacting how other regulatory bodies function and possibly even challenging the balance of power amidst regulators and those they regulate.
For full details of the case ruling, you may refer to the original report from Manatt, Phelps & Phillips, LLP.