September 14, 2023

Judge Grants Win to ABA, Chamber in Lawsuit Over CFPB UDAAP Exam Manual

A federal judge in Texas granted summary judgment to the American Bankers Association, the Texas Bankers Association, the U.S. Chamber of Commerce and several other co-plaintiffs in their challenge to the Consumer Financial Protection Bureau’s UDAAP exam manual, in which the bureau unlawfully expanded the statutory definition of “unfairness” to encompass discrimination. In a sharp rebuke of the agency, the judge issued a final judgment Friday setting aside the CFPB’s March 2022 interpretation of its UDAAP authority.

The court granted additional protection to the plaintiffs’ members by issuing a final judgment prohibiting the CFPB from “pursuing any examination, supervision, or enforcement action against any member of a plaintiff organization based on the CFPB’s interpretation of its UDAAP authority.”

ABA President and CEO Rob Nichols said the court’s ruling “makes clear the CFPB exceeded its statutory authority when it ‘updated’ its exam manual and announced an open-ended and novel power to examine banks for alleged discriminatory conduct.”

The judge agreed with ABA that the CFPB clearly exceeded its statutory authority under the Dodd-Frank Act. In addition, the judge upheld ABA’s challenge to the exam manual on the grounds that it was the product of an unconstitutionally funded agency. (Texas is covered by an appellate court ruling, currently being appealed to the U.S. Supreme Court, that found the bureau’s funding violates the Appropriations Clause of the Constitution.)

While ABA repudiates discrimination of any kind, it argued in the case that the bureau’s unfair, deceptive and abusive acts or practices, or UDAAP, authority cannot be used to extend the fair lending laws beyond the bounds set by Congress.

“We strongly support the fair enforcement of nondiscrimination laws, but the bureau’s extraordinary expansion of its regulatory reach crossed the line,” Nichols added. “We hope this ruling sends a clear message to the bureau and all federal regulators that they must operate within the boundaries set by Congress.”

ABA Warns Against CBDC Adoption

A central bank digital currency is unnecessary in the U.S. and would present unacceptable risks and costs to the financial system, the American Bankers Association said in a statement to the House Financial Services Subcommittee on Digital Assets, Financial Technology and Inclusion. The subcommittee held a hearing today on the effects of CBDC adoption and possible private sector alternatives to the currency. In its comments, ABA noted the dollar is already digital and it is unclear how issuing a CBDC would improve financial inclusion or achieve the other laudable goals of its proponents.

“On the other hand, issuance of a CBDC would fundamentally change the relationship between citizens and the Federal Reserve, undermine the important role banks play in financial intermediation, exacerbate economic and liquidity crises, and impede the transmission of sound monetary policy,” ABA said.

ABA added that there are possible alternatives, such as a wholesale CBDC recently mentioned by Fed Governor Michelle Bowman, which could be used in the settlement of certain financial market transactions and for processing international payments. The concept “should be carefully evaluated before moving forward with a CBDC,” the association said.

MBA Publishes Resources on Protecting Customers From Check Fraud

Many types of scams and frauds target bank customers, but one in particular has skyrocketed across the country — check fraud. To assist its member banks, MBA has published a one-page flyer and social media posts that banks can use to help their customers protect their money.

At MBA’s website, bankers can download three options for the flyers. These options allow banks to use materials with MBA’s logo and contact information or to use a template that banks can brand with their logos and contact information. Another option is a co-branded flyer with MBA’s logo.

In addition to the flyer, MBA created three social media posts and graphics for banks to use. Graphics are available for Facebook, X (formerly Twitter), LinkedIn and Instagram.

A password to MBA’s website is required to access the documents. For more information, please contact MBA Senior Vice President Carol Barnett.

As previously shared by MBA, the American Bankers Association has created an online Check Fraud Claim Directory to help banks resolve check fraud claims more efficiently. The directory is available to both ABA members and nonmembers.

Financial Literacy Webinar Series to Kick Off Sept. 20

With financial literacy reportedly declining in the U.S., the American Bankers Association Foundation will hold a free, two-part webinar series to examine the problem and to provide banks ways to advance solutions in their communities. The first webinar on new research highlighting financial literacy problems is noon Wednesday, Sept. 20. The second webinar on specific solutions for banks is noon Wednesday, Oct. 4.

ABA Releases New #BanksNeverAskThat Toolkit

In preparation for the Oct. 2 launch of the next #BanksNeverAskThat anti-phishing campaign, the American Bankers Association unveiled a free, plug-and-play toolkit of campaign resources for banks that participate. The toolkit includes evergreen and holiday social media, including Spanish-language versions; digital signage and resources; and marketing and PR resources, including a new PowerPoint presentation on phishing. MBA encourages banks to register for #BanksNeverAskThat; registration is free for all banks.

FDIC Forum: Utilizing Core Technology to Reach the Unbanked

The Federal Deposit Insurance Corporation will host a national community development forum at noon Thursday, Sept. 21, to encourage banks to utilize core technology to reach unbanked populations and facilitate an expansion in the number of banks offering affordable accounts. The event will be held both in-person in Arlington, Virginia, and online, with the virtual event starting at noon.