Supreme Court Case May Have Big Impact on CFPB

June 25, 2013
American Banker  
payday lending news

The Supreme Court is scheduled to hear two cases later this year that could drastically impact lenders and potentially challenge the legality of certain new regulations. One week after the high court agreed to hear a case that might compromise regulators' use of "disparate impact" theory to pursue fair lending cases, it confirmed on June 24 that it would also hear a case that scrutinizes President Barack Obama's recess appointments to the National Labor Relations Board. Because Consumer Financial Protection Bureau (CFPB) director Richard Cordway's recess appointment was made the same day as the NLRB appointments, the legal powers given to the CFPB under the Dodd-Frank Act could be at stake. The newly formed agency was granted regulatory authority to write new rules that cover all banks as well as the power to regulate non-banks such as debt collectors and payday lenders. In a drafting error, however, the law said the non-bank regulators were not valid until a Senate-confirmed director of the agency was installed.
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