My Unfair Lady: An Analysis of the CFPB's Authority to Prosecute Discriminatory Conduct under Dodd-Frank’s UDAAP Standard in the Age of the Major Questions Doctrine

Abstract

According to President Lyndon B. Johnson, the Civil Rights Act of 1964 “affirmed that men equal under God are also equal when they seek a job, when they go to get a meal in a restaurant, or when they seek lodging for the night in any State in the Union.” Neither Congress nor President Johnson, however, mentioned bank accounts, overdraft fees, or access to bank branches. On March 16, 2022—nearly six decades later—the Consumer Financial Protection Bureau attempted to fill this gap. It revised its examination manual to identify discrimination in consumer financial products as an “unfair, deceptive, or abusive act or practice.” When Congress established the CFPB in 2010, it expressly empowered it to eliminate such practices, adopting a standard which it has featured in federal law since 1938. Various agencies have previously considered using the standard to address discrimination, but until March 2022 none ever had.

So why now? The CFPB’s newly appointed director, Rohit Chopra, announced the change to the examination manual and said, “When a person is denied access to a bank account because of their religion or race, this is unambiguously unfair.”

Less than five months after the announcement, however, the Supreme Court threw the agency’s decision into doubt by offering a new framework for evaluating agency statutory interpretation in West Virginia v. EPA. The West Virginia case announces a new “major questions doctrine” in which agency action requires clear congressional authorization depending on the “history and breadth of the authority that [the agency] has asserted” and its “economic and political significance.” On September 28, 2022, industry groups led by the Chamber of Commerce filed suit against the CFPB, citing West Virginia v. EPA in claiming the CFPB overstepped its statutory authority. On September 8, 2023, a federal judge sitting in the Eastern District of Texas decided against the CFPB, enjoining the agency from implementing its anti-discrimination policy. The judge cited the major questions doctrine and West Virginia v. EPA in striking down the agency’s revision as beyond its statutory authority.

This Note considers the effects of West Virginia v. EPA and the ‘major questions doctrine’ on anti-discrimination efforts by the CFPB and other federal agencies, specifically analyzing discrimination as a “major question,” and determining the lengths to which the UDAAP standard “clearly authorizes” anti-discrimination action. Given the political significance of anti-discrimination laws, the potential ramifications of allowing the CFPB freedom to interpret the UDAAP standard, and the long history of a narrower interpretation of the law, this Note argues that whether the CFPB can prohibit banks from denying access to accounts on the basis of religion or race could be a major question. However, the UDAAP standard, which is an express delegation by Congress to the CFPB to liquidate the content and nature of fair practices over time, is best read as a clear statement authorizing the CPFB to eliminate discrimination in consumer financial products.