The end of Chevron deference is a boon for banking lobbyists, who have in recent years intensified their pushback against the agencies that oversee them — especially the Consumer Financial Protection Bureau, one of the industry’s most aggressive regulators.
The consumer bureau’s interpretations “may now be subject to heightened attack and may require far more justification than formerly was the case,” said Joseph Lynyak, a partner at Dorsey & Whitney who specializes in financial regulation.
While the decision will complicate regulators’ jobs, its effects will likely seem familiar to them. Losing the Chevron deference will amplify a shift already underway in the lower courts, which have in recent years been receptive to lawsuits challenging financial regulators’ actions. The U.S. Court of Appeals for the Fifth Circuit, in particular — and the federal courts under its purview — has been a major roadblock, preventing the bureau from imposing credit card late fee limits and expanding its interpretation of anti- discrimination laws.
One recent action that may now be ripe for a challenge is the bureau’s decision that Buy Now, Pay Later lenders are credit card providers, giving buyers a right to dispute charges and demand refunds.
“Because this interpretive rule pushes the envelope past existing law into pure agency interpretation, it will be an attractive target for industry challenge,” said Erin Bryan, another partner at Dorsey & Whitney.
In addition to the C.F.P.B., trade groups representing banks have sued other federal bank regulators, including the Office of the Comptroller of the Currency and the Federal Reserve. They have challenged those regulators over a host of rules, from a sweeping anti-redlining regulation to one requiring banks to disclose detailed data about their small business loans.
Outside advocacy groups have also gotten into the habit of suing the regulators, though the bulk of their activity took place during the Trump administration, when proponents of stricter financial regulation felt that government officials were unlawfully loosening rules on banks and other firms. Their preferred appeals circuit was the Ninth; they often filed federal court cases in the Northern District of California, where they expected judges to treat their arguments favorably.
Both sides won rulings by judges who declined to defer to the regulators.
“A court can always avoid getting to the Chevron deference in the first place by saying that a statute is not ambiguous, and that’s what happens the vast majority of the time,” said Randy Benjenk, a partner at Covington & Burling who focuses on financial regulation.
“In practice it’s been rare for a judge to conclude that a statute is ambiguous and defer to an agency’s interpretation of law. Judges routinely reach their own interpretations that contradict the agencies. That’s true in courts nationwide, whether in Texas, California or anywhere else.”