On Tuesday, the U.S. Consumer Financial Protection Bureau faced a jurisdictional setback in a lawsuit challenging its new rule that caps credit card late fees at $8. A federal appeals court ruled that the case should remain in Texas instead of being transferred to a judge in Washington, D.C.
This decision was made by a three-judge panel of the U.S. Fifth Circuit Court of Appeals, based in New Orleans, marking a victory for business and banking groups challenging a key measure of the Biden administration’s crackdown on "junk fees."
At issue is a rule prohibiting card issuers with over one million open accounts from charging more than $8 in late fees unless they can prove that higher fees are necessary to cover their costs.
The Consumer Financial Protection Bureau had spent months trying to move the case out of a federal court in Fort Worth, a venue that has become a preferred location for plaintiffs challenging the Democratic president's agenda, where both sitting judges were appointed by Republicans.
One of the judges, U.S. District Judge Mark Pittman, appointed by former President Donald Trump, had in May halted the implementation of the rule at the request of groups including the U.S. Chamber of Commerce and the American Bankers Association.
But Pittman did so after the Fifth Circuit Court blocked his earlier attempt to transfer the case to a judge in Washington.
Pittman had previously emphasized that his caseload was too heavy and required his attention. However, critics accused these groups of "judge shopping."
