In an unusual move, the CFPB is coming to the defense of a bank being accused of failing to provide repayment disclosures to a borrower.

U.S. District Judge Manish Shah of the Northern District of Illinois asked for the agency to comment on whether the Bank of Orrick violated federal requirements to provide borrower Jose Lopez with required disclosures, including how long it would take for him to repay his loan if he only paid the monthly minimum payment.

The CFPB filed an amicus brief on July 1 stating that the type of line of credit that Lopez received through Kendall Bank from the Bank of Orrick in 2022 was exempt from such requirements. Lopez obtained an open-end “Vault” line of credit from the bank, not a credit card account. (“Vault” is a trade name used by the bank.).

Lopez filed suit, contending that he was not receiving the required disclosures with his statement each month; he said that violated Section 127(b)(11) of the Truth in Lending Act , 15 U.S.C. 1637(b)(11), and Regulation Z. He is attempting to pursue the claim on behalf of all persons in Illinois who received similar statements with their “Vault” credit lines.

In its amicus brief, the CFPB said that since 2010, the disclosure obligations have only applied to credit card accounts under an open-end consumer credit plan. “That’s because the Federal Reserve Board [exercised the statutory authority granted to it under Sections 105(a) and (f) of the Truth in Lending Act, 15 U.S.C. 1605(a) and (f), and] exempted open-end credit plans that are not credit card accounts from these statutory repayment disclosure obligations when it amended Regulation Z to implement the Credit Card Accountability Responsibility and Disclosure Act (the CARD Act),” the Bureau said.  

Attorneys for Lopez disagreed. “Neither the CFPB nor defendants have identified a regulation that states that non-credit card open end credit plans are exempt from the repayment disclosures of federal law,” the attorneys wrote, responding to the CFPB’s amicus brief. “No such regulation exists.”

We think the law is clear and we agree with the CFPB.  We would encourage it to file amicus briefs supporting consumer financial service providers on a more regular basis even in the absence of Chevron deference, not just on Truth in Lending issues but also on issues arising under the other Federal consumer financial laws.  In addition, we again call on the CFPB to revive the best vehicle for interpreting the Federal consumer financial laws, the Official Staff Commentaries. The industry and consumers benefit from that clarity and consistency.