As the Supreme Court deliberates over the Fifth Circuit's ruling that the CFPB's funding method is unconstitutional, another court in the Fifth Circuit dealt a blow to the CFPB's aggressive agenda. On Friday, the District Court for the Eastern District of Texas invalidated the Bureau's March 2022 updates to its examination manual that instructed CFPB examiners to determine whether financial institutions and service providers adequately protect against discrimination, including disparate impact. If it holds in likely appeals, the decision could have a far-reaching impact on both the CFPB's and the FTC's attempts to use their unfairness authority to bring enforcement to remedy perceived discriminatory practices, as well as other attempts by both agencies to broadly interpret statutory grants of authority and use them in novel and untested ways.
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