Houston, Texas – A federal judge in Texas has leveled accusations against major banking industry groups and the U.S. Chamber of Commerce for engaging in venue shopping in their lawsuit against the Consumer Financial Protection Bureau.
The lawsuit at hand revolves around the CFPB’s new regulations regarding credit card late fees, where the average late fee for customers would be limited to $8, a decrease from the previous average of $32. The major banking groups initiated their lawsuit in the U.S. District Court in the Northern District of Texas, a jurisdiction where industry and interest groups have historically pursued legal action against the Biden administration due to its conservative judicial climate.
The Bureau argued that the banks’ choice to file in Texas was a strategic move to secure a favorable ruling. Judge Mark Pittman’s ruling favored the federal regulator, directing that the lawsuit be transferred to Washington, where the banking lobby has ample legal representation to handle the case effectively.
Pittman questioned the justification behind the major industry groups’ decision to file in Texas, noting the absence of any direct connection between the banks affected by the CFPB regulations and the Fort Worth Division. The only apparent link was the Fort Worth Chamber of Commerce’s recent acquisition of a major bank as a member.
The banks’ opposition to the late fee rule stems from the substantial revenue losses they anticipate, with estimates indicating that banks generate around $14 billion annually from credit card late fees. The CFPB defended Washington as a more suitable venue for addressing banking industry regulations, citing proximity to regulators and expertise in industry regulation law.
The ruling aligns with the Biden administration’s stance, emphasizing the lack of relevance to the banking industry in the Fort Worth Division. Notably, the American Bankers Association and the Consumer Bankers Association refrained from immediate comment following the court’s decision.