CFPB Conflation White Paper


July 06, 2022


Banks are committed to serving the families and businesses in their communities and proudly supply the financial products and services that provide important economic opportunities for individuals, families, and small business owners. It follows that banks support fair, objective, and transparent enforcement of civil rights and fair lending laws. However, we cannot support the CFPB's recent actions, taken without legislative authority, to extend fair lending laws beyond the bounds carefully set by Congress.

For the better part of a century, Congress has taken affirmative steps to protect American consumers by preserving their ability to choose the products and services that best fit their individual needs. In 1938, for example, Congress gave the Federal Trade Commission (FTC) the ability to prohibit “unfair” acts or practices in or affecting commerce, a term that Congress would later give a precise statutory definition. And for more than 50 years, Congress enacted a series of civil rights laws to protect consumers from invidious discrimination on the basis of specific characteristics and in specific contexts, including Title VII of the Civil Rights Act of 1964 (employment), the Fair Housing Act of 1968 (housing), the Equal Credit Opportunity Act of 1974 (credit), and the Americans with Disabilities Act of 1990 (disability). Most recently, in 2010, Congress enacted the Dodd-Frank Act, which created the Consumer Financial Protection Bureau (CFPB) and gave it authority nearly identical to that of the FTC to prohibit “unfair” acts or practices by covered persons or service providers offering or providing consumer financial products and services. Congress separately authorized the CFPB to implement two specific antidiscrimination laws, the Equal Credit Opportunity Act (ECOA) and the Home Mortgage Disclosure Act (HMDA).

Throughout these many decades, Congress never used these two statutory concepts, “unfairness” on the one hand, and “discrimination” on the other, interchangeably. Rather, they are distinct, and each has a well-established meaning and scope of application. However, on March 16, 2022, the CFPB conflated the concepts by announcing that it would begin examining financial institutions for alleged discriminatory conduct that it deemed to be “unfair” under its “unfair, deceptive, and abusive acts or practices” (UDAAP) authority. The CFPB also revised its examination manual to reflect its new view that “unfairness” can be applied to allegedly discriminatory practices.

The Associations call on the CFPB to rescind the revised examination manual. Congress did not authorize or intend for the CFPB to “fill gaps” between the clearly articulated boundaries of antidiscrimination statutes with its UDAAP authority. However, if the CFPB believes additional authority is necessary to address alleged discriminatory conduct, we stand ready to work with Congress and the CFPB to explore that possibility and to ensure the just administration of the law.

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CFPB Conflation White Paper