Litigation

The Consumer Financial Protection Bureau, now led by Treasury Secretary Scott Bessent, agreed to temporarily halt enforcement and litigation over its medical debt rule, handing the banking industry an immediate reprieve.

The Supreme Court heard oral arguments in Thompson v. United States, which could decide whether the federal government can prosecute "misleading" in addition to "false" statements to the Federal Deposit Insurance Corp.

Two trade groups filed a lawsuit against the Consumer Financial Protection Bureau claiming it exceeded its authority and ignored the legislative history on medical debts.

Consumer Financial Protection Bureau Director Rohit Chopra said opposition to the bureau's recently finalized open banking rule should be viewed as banks and other large firms attempting to quash competition and stymie consumer data protection.

Rohit Chopra, the director of the Consumer Financial Protection Bureau, said his tenure at the agency could be characterized as simply reading statutes rather than finding novel ways to enforce regulations.

The Consumer Financial Protection Bureau and Department of Justice issued a consent order against Wisconsin-based nonbank mortgage originator Fairway Independent Mortgage over redlining allegations. Fairway is the country's fifth-largest mortgage originator by volume.

Agencies must now provide clearer justifications for their interpretations, while Congress needs to draft more precise legislation. The decision could empower banks to challenge agency rules more frequently and potentially prolong regulatory processes, with courts giving less deference to agency interpretations.

The lawsuit, which the plaintiff seeks class certification for, involves a transfer, overpayments during a grace period and allegations of improper late fees.

Four companies are fighting CFPB enforcement actions by claiming the agency cannot be funded by the Federal Reserve, which has not been profitable since 2022. The consumer bureau calls the new legal theory "meritless."

With the landmark Supreme Court decision overturning Chevron USA v. National Resources Defense Council, much of the rule making by the Federal Reserve Board, the SEC, HUD and other agencies is now open to attack, writes the Chairman of Whalen Global Advisors.