April 21, 2024

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Judge calls on banking industry to choose Texas court to challenge credit card fee caps – 'The place is not a continental breakfast'

Judge calls on banking industry to choose Texas court to challenge credit card fee caps – 'The place is not a continental breakfast'

A federal judge in Texas on Thursday accused major banking industry groups and the U.S. Chamber of Commerce of shopping around in their lawsuit against the Consumer Financial Protection Bureau, a major win for the federal regulator.

The office argued that the only reason the banks filed their lawsuit in Texas was to increase their chance of getting a favorable ruling. Judge Mark Pittman ruled that the case should be transferred to Washington, where the banking lobby has armies of lawyers capable of dealing with this case.

“It's not a continental breakfast; “You cannot choose where and how to file suit at the whim of the plaintiff,” Pittman wrote.

The lawsuit addresses the CFPB's new regulations Late credit card fees, where the average late fee for a customer will be set at $8, less than the average late fee of $32. The major banking groups filed their lawsuit before the US District Court in the Northern District of Texas. Industry and interest groups have frequently filed lawsuits against the Biden administration there, due to its historically conservative judges.

Banks are pushing hard to stop the late fee rule, because of the potential billions in revenue banks could lose. The bureau estimated when it issued the proposal that banks brought in nearly $14 billion in late credit card fees annually.

In his ruling, Pittman found no good reason why the major industry groups — the American Bankers Association, the Consumer Bankers Association, and the U.S. Chamber of Commerce, among others — should file a lawsuit there. The only banking industry connection to the area was the Fort Worth Chamber of Commerce, which had recently taken on a major bank as a member.

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The CFPB argued that Texas was an irrelevant venue to bring a lawsuit over banking industry regulation, saying that Washington, with its closer location to regulators and expertise in industry regulation law, was more appropriate.

Pittman agreed with the Biden administration.

“In fact, as far as this court can see, none of the banks or credit card companies that are directly affected by the future (CFPB regulations) are in the Fort Worth Division,” he said.

The American Bankers Association and the Consumer Bankers Association did not immediately respond to a request for comment.

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