The VBA and the national financial service trade groups have historically focused our advocacy efforts on elected officials – legislators drafting and debating the laws enacted or thwarted in the Capitols of Richmond and Washington. Another layer down into the implementation of those laws is our regulatory engagement. Comment letters on pending rules and encouraging legislative oversight or course correction are the typical avenues to influence final construction and ensure our industry voice is part of the mix. Often viewed as the last resort in the chain of advocacy approaches, utilizing litigation to shape regulatory policy is becoming more prevalent and likely will continue to be a larger component of advocacy strategy by trade associations.

Litigating banking policy through the courts is not a new phenomenon. Since the historic decision in McCulloch v. Maryland in the nascent days of our nation, banks have won and lost in their efforts in the judicial system. In the late 1990s, banks were successful in challenging the NCUA’s expansion of credit unions’ field of membership at the U.S. Supreme Court, only to have that victory wiped out by Congress and then-President Clinton within months. Recently, the constitutionality of the CFPB’s funding structure has been a major point of contention, with the Supreme Court finally affirming its legal status.

The increased proclivity to seek relief through the courts has several causes. The first is the significant divergence of policy ideology and operational regulatory approach between recent Administrations and the personnel chosen to lead bank regulatory agencies, especially the CFPB. Sudden swings in interpretations, priorities and prevailing dogmatic thought cultivate a ripe environment for legal challenges. Regulators attempting to stretch their authority in pursuit of political aims can be constrained by jurists, especially those known to hew more to the other side. Suits have also risen in conjunction with more frequent usage of the heretofore seldom-used Congressional Review Act (CRA). This other CRA allows Congress to overturn an administrative rule within a short period of time after it is finalized. Filing a lawsuit extends the potential timeline for a rule becoming final and becoming subject to potential reversal under this process. It allows for the potential melding of litigation and traditional advocacy means.

The VBA has fought against the expansion of credit union authority through direct and grassroots lobbying (successful this last General Assembly session), regulatory input channels and the appeals process before the judges at the State Corporation Commission (also successful). The national trade associations including the ABA have been busy in the courts, pushing back against regulatory overreach on credit card late fees, Community Reinvestment Act expansion, and CFPB exam interpretation of UDAAP. The recent Supreme Court ruling overturning the forty-year precedent established in the Chevron case whereby courts deferred to interpretations by governmental agencies of ambiguous statutes could further expand the use of litigation as an effective means to impact policy.

Whether through the courts, the regulatory agencies, or the legislature, advocacy must be a multi-pronged approach. The VBA will always evaluate and take the best course of action on behalf of our member banks.