By Mike Scarcella (Reuters) -A coalition of banking groups has convinced a federal judge to temporarily block enforcement of a U.S. Consumer Financial Protection Bureau rule aimed at making it easier for consumers to switch financial-service providers. In a ruling Wednesday, U.S. District Judge Danny Reeves in Lexington, Kentucky, paused compliance deadlines for the so-called […]
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US judge blocks consumer agency’s ‘open banking’ rules for now
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By Mike Scarcella
(Reuters) -A coalition of banking groups has convinced a federal judge to temporarily block enforcement of a U.S. Consumer Financial Protection Bureau rule aimed at making it easier for consumers to switch financial-service providers.
In a ruling Wednesday, U.S. District Judge Danny Reeves in Lexington, Kentucky, paused compliance deadlines for the so-called “open banking” rule in a lawsuit brought by Forcht Bank, the Kentucky Bankers Association and the Bank Policy Institute.
Reeves halted the rule while the consumer bureau, which is under new leadership in Republican President Donald Trump’s administration, undertakes a new rulemaking process.
The move to revise the rule comes amid a broader Trump-era push to rein in the CFPB, which a top administration official recently said should be shut down.
The consumer bureau did not immediately respond to a request for comment.
The Bank Policy Institute, Kentucky Bankers Association and Forcht Bank welcomed the judge’s order in a statement.
The decision “ensures banks won’t be forced to invest time and resources preparing for a rule that is currently being rewritten,” they said.
The rule, finalized last year under Democratic President Joe Biden, would allow consumers at no cost to more easily access and share data from bank accounts, credit cards, mobile wallets, payment apps and other financial products.
The banking groups in their lawsuit said the regulation exceeds the agency’s authority and imposes costly burdens. Reeves agreed, saying the plaintiffs are likely to succeed in showing the CFPB overstepped its authority.
“The plaintiffs and their members are being compelled to incur expenses that would be unrecoverable and unnecessary,” Reeves wrote. He said the plaintiffs were likely to succeed on the merits of their lawsuit.
The injunction will remain in effect until the agency completes its reconsideration, the judge said.
(Reporting by Mike Scarcella; Editing by David Gregorio)