ABA's Opening Brief, 12/03/2024

Texas Bankers Association; Rio Bank, McAllen, Texas; American Bankers Association; Texas First Bank; Independent Bankers Association of Texas; Independent Community Bankers of America, Plaintiffs-Appellants,

v. Consumer Financial Protection Bureau; Rohit Chopra, in his official capacity as Director of the Consumer Financial Protection Bureau, Defendants-Appellees,

v. Texas Farm Credit; Farm Credit Council; Capital Farm Credit, Intervenor Plaintiffs-Appellants,

XL Funding, L.L.C.; Equipment Leasing and Finance Association; Rally Credit Union; Credit Union National Association; Cornerstone Credit Union League, Intervenors-Appellants.

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STATEMENT REGARDING ORAL ARGUMENT

Given the important legal issues and the harms from the Consumer Financial Protection Bureau’s impermissible rule, Plaintiffs-Appellants Texas Bankers Association, et al., previously requested an expedited setting of oral argument. This Court granted that request and set February 3, 2025, as the date for oral argument for this appeal.

INTRODUCTION

The authority of the Consumer Financial Protection Bureau (“CFPB”) is not boundless. The CFPB, like all other agencies, may exercise only the authority that Congress grants it and, in doing so, must satisfy the Administrative Procedure Act’s (APA) requirements. See Midship Pipeline Co. v. FERC, 45 F.4th 867, 875-76 (5th Cir. 2022); 5 U.S.C. § 706. The CFPB’s Rule1 violated those limits here.

In 15 U.S.C. § 1691c–2, Congress granted limited authority to the CFPB to issue a rule requiring lenders to collect, compile, and disclose to the CFPB and the public data regarding small-business loan applications. Congress was precise, however, regarding the data that could be subject to this requirement: Lenders must inquire “whether the business is women-owned, minority-owned, or [a] small business” and then compile and maintain “information provided by any loan applicant pursuant to” this inquiry. Congress then listed the types of data that must be compiled and maintained, all of which concern the loan application and the underwriting decision on that loan application. Nothing in the statute suggests that lenders would be required to collect and make public confidential information regarding the pricing of their loans, which is not “provided by the [loan] applicant.” And had Congress wanted to include such sensitive pricing information, it would not have empowered the CFPB to publicly disclose that information. Yet the CFPB has impermissibly asserted for itself both the power to order the collection of such pricing information and the right to disclose that proprietary information to the public.

The Rule also impermissibly requires lenders to ask small- business applicants’ personal information regarding the LGBT status of their owners. Congress did not authorize the CFPB to order the collection and public disclosure of the LGBT status of the principal owners of businesses seeking to take out loans.

To make matters worse, the CFPB promulgated this unlawful rule without fairly considering the costs it would impose, as Congress required it to do. When promulgating its new rule, the CFPB blinded itself to accurate data about its costs, choosing to rely on inaccurate data that painted a far rosier picture about the costs and benefits of the Rule and failing to meaningfully consider other costs commenters raised.

The Court should hold that the Rule exceeds the CFPB’s statutory authority and is otherwise arbitrary and capricious.

ABA Files Opening Brief in Section 1071 Appeal

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