The American Bankers Association today joined the U.S. Chamber of Commerce, Fort Worth Chamber of Commerce, Longview Chamber of Commerce, Consumer Bankers Association, and Texas Association of Business in filing a lawsuit in the U.S. District Court for the Northern District of Texas against the Consumer Financial Protection Bureau (CFPB) that challenges the CFPB’s new rule limiting credit card late fees. The plaintiffs are also seeking a preliminary injunction barring the bureau from implementing the new rule.
“The CFPB’s action to cap credit card late fees below banks’ actual costs exceeds its authority and would result in more late payments, increased debt, reduced credit access and higher APRs for all consumers – including the vast majority of card holders who pay on time each month,” said ABA President and CEO Rob Nichols. “Once again, we have reluctantly been forced to sue a federal regulator because the CFPB has ignored industry and other stakeholder comments demonstrating that this rule exceeds the bureau’s statutory authority and will hurt rather than help consumers. This rule is about politics not policy, and we look forward to the court’s review.”
The litigation challenges the bureau’s March 5 decision to finalize a rule restricting credit card late fees. The rule specifically slashes the safe harbor amount that the Federal Reserve set for those fees — and every previous CFPB has maintained — by 75% and upends more than a decade of regulations.
In the filing, ABA and its co-plaintiffs argue:
“In taking these actions, the CFPB violated the Appropriations Clause, exceeded its statutory authority, and offered deficient analysis and reasoning, all in order to achieve a pre-ordained outcome that will ultimately harm those consumers the CFPB is charged with protecting. To top it off, the CFPB adopted an effective date that violates yet another statute and that exposes issuers to immediate and irreparable harm. This Court should vacate the Final Rule.”
ABA and its co-plaintiffs’ specific arguments for challenging the rule and seeking a preliminary injunction include:
About the American Bankers Association
The American Bankers Association is the voice of the nation’s $23.7 trillion banking industry, which is composed of small, regional and large banks that together employ approximately 2.1 million people, safeguard $18.8 trillion in deposits and extend $12.5 trillion in loans.
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