Recently, federal district courts dismissed two cases which challenged two final rules promulgated by the CFPB under the previous administration. Specifically, these dismissals came soon after President Trump repealed the CFPB’s overdraft lending and larger participant rules on May 9. As previously covered by InfoBytes, Congress used the Congressional Review Act to eliminate both rules.
On May 20, the U.S. District Court for the District of Columbia received notice from two plaintiffs that they were voluntarily dismissing all claims against the CFPB and Acting Director Russell Vought. The plaintiffs had initially challenged the CFPB’s larger participant rule, which defined larger participants in the digital consumer payment application market. However, with the rule no longer in effect, the plaintiffs chose to withdraw their complaint without prejudice, effectively ending the legal proceedings in the case. The rule, had it not been nullified, would have subjected non-bank digital payment providers processing at least 50 million transactions annually to CFPB supervision.
On May 16, the U.S. District Court for the Southern District of Mississippi granted the plaintiffs’ unopposed motion to dismiss without prejudice in a case where several banking associations and financial institutions sued the CFPB to challenge its overdraft lending rule. Specifically, as previously covered by InfoBytes, the plaintiffs — which included three banking associations, a credit union association, and three banks — brought suit challenging the CFPB’s final rule amending Regulation Z to cover overdraft services not previously regulated under TILA. Following a joint resolution by Congress overturning the rule (covered here), all parties agreed that the controversy is now moot, leading to a dismissal by the court for lack of subject matter jurisdiction, with each party bearing its own costs, expenses and attorneys’ fees.
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