Even if a small bank's lawsuit challenging the authority and leadership of U.S. Consumer Financial Protection Bureau fails in court, it could force the bureau to publicly define its limits, a top banking industry lawyer said.
Joseph Barloon, a partner at Skadden Arps in Washington, said the bureau could be forced to say what it can and cannot do, and provide the banking industry some guidance on the agency’s positions on issues such as mortgage lending.
"By being put in a position where it has to defend a claim that it has too much authority, it might need to make statements about its own limits on its authority," Barloon told Thomson Reuters.
"There is a lot of uncertainty today with respect the CFPB can do and how it would do it, " he said. "This lawsuit, even if not successful, may help clarify some of those issues."
The comments come a week after a small community bank in Texas launched the first lawsuit against the CFPB over the recess appointment of its director and its
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