In an unexpected turn of events, the Consumer Financial Protection Bureau (CFPB) is fighting to maintain its authority to protect Christian groups and other religious organizations from discriminatory “debanking” practices. This stance puts the typically Democrat-favored agency at odds with some financial institutions and, ironically, aligns it with conservative causes.

The controversy stems from a March 2022 update to the CFPB’s examination manual, which stated that discriminatory practices could potentially violate laws against unfair, deceptive, or abusive acts and practices (UDAAP). Several banking industry groups sued, claiming the CFPB had overstepped its authority.

A federal district court in Texas sided with the industry groups, ruling that the CFPB lacks the statutory power to treat discrimination as an unfair practice under UDAAP laws. The court issued a broad injunction barring the CFPB from examining or taking enforcement action against financial institutions for discriminatory conduct under its UDAAP authority.

Now, in a strongly-worded appeal filed with the Fifth Circuit Court of Appeals, the CFPB is fighting back. The agency argues that the district court’s ruling was deeply flawed and could severely hamper efforts to protect consumers from discriminatory treatment in banking and lending, including discrimination against Christian groups.

The CFPB contends that discriminatory practices can clearly meet the statutory definition of unfairness if they cause substantial injury to consumers that is not reasonably avoidable and is not outweighed by benefits to consumers or competition. The agency points out that other regulators, including the Federal Trade Commission, have long interpreted similar unfairness authority to encompass discriminatory conduct.

This case has implications far beyond Christian groups. In recent years, activists from both the right and left have been banned from bank accounts and financial platforms over political speech-related allegations with no due process in what is known as “debanking”. The CFPB argues that its authority to address discrimination as unfair is also crucial for protecting other groups who have faced debanking threats, which would include progressive organizations that have criticized Israel. The agency maintains that its interpretation is fully consistent with the text, history, and purpose of consumer protection laws.

The CFPB’s appeal argues that even if the court believes some applications of unfairness authority to discrimination might raise concerns, that doesn’t justify a blanket prohibition. The agency contends it should at least be allowed to investigate potential discrimination and determine on a case-by-case basis whether specific conduct meets the statutory standard for unfairness.

As the case moves forward, it highlights the complex and sometimes surprising alliances that can form around issues of financial regulation and discrimination. While the CFPB has often been criticized by conservatives as overreaching, in this instance, its fight to maintain broad anti-discrimination authority could benefit conservative Christian groups.

The Fifth Circuit’s eventual ruling could have major ramifications for how discrimination is regulated in the financial sector and beyond. For now, the CFPB remains determined to preserve what it sees as a crucial tool for combating unfair treatment of consumers, regardless of their beliefs or affiliations.

This case serves as a reminder that the chilling of speech through financial discrimination doesn’t just affect one group – it’s a threat to everyone’s freedom. While you may not belong to a group being singled out and denied services now, the CFPB argues, it could be you next. That’s why, according to the agency, it’s crucial to ensure that speech that is not illegal be protected from this form of coercion.

The outcome of this case could set a significant precedent for how financial institutions interact with various groups, potentially affecting everything from religious organizations to political advocacy groups across the ideological spectrum. As the legal battle continues, it underscores the ongoing debate about the balance between regulatory authority and financial industry practices in protecting consumers from discrimination.