The Consumer Financial Protection Bureaus Use of Unfairness to Regulate Discriminatory Conduct: A Discussion of the Consumer and Industry Perspectives
Our special guest is Jeff Sovern, Professor at the University of Maryland Francis King Carey School of Law. In March 2022, the CFPB announced that it had revised its exam manual to instruct its examiners to apply the \u201cunfairness\u201d standard under the Consumer Financial Protection Act to conduct considered to be discriminatory, whether or not it is covered by federal laws that expressly prohibit discrimination. The changes were subsequently vacated by a federal district court in a lawsuit brought by several trade groups challenging the changes and the Fifth Circuit has stayed the CFPB\u2019s appeal from that decision pending the U.S. Supreme Court\u2019s decision in CFSA v. CFPB. In this episode, we first review the background of the exam manual changes, the industry response, and the district court\u2019s decision. We then take a close look at the key arguments both in support of and against upholding the decision. We conclude with a discussion of the use of disparate impact in applying the unfairness standard to discriminatory conduct and the appropriateness of the CFPB\u2019s use of changes to its exam manual to announce its new interpretation of the standard.
Alan Kaplinsky, Senior Counsel in Ballard Spahr\u2019s Consumer Financial Services Group, leads the discussion, joined by Richard Andreano, a Partner in the Group and Practice Leader of the firm\u2019s Mortgage Banking Group.