On June 28, 2024, the Supreme Court reached a decision in an important case impacting financial institutions, holding that “The Administrative Procedure Act requires courts to exercise their independent judgment in deciding whether an agency has acted within its statutory authority, and courts may not defer to an agency interpretation of the law simply because a statute is ambiguous.” The 6-3 decision effectively overturns the 1984 Supreme Court decision in Chevron v. National Resources Defense Council. That case established the so-called Chevron doctrine, whereby courts sided with a federal government agency’s interpretation of a law so long as the interpretation was reasonable considering Congress’s intent.

Proponents of the ruling think federal agencies, including the Consumer Financial Protection Bureau (CFPB), have too much power and courts show too much deference to their actions. Now, courts can exercise their independent judgment in deciding whether an agency has acted within its statutory authority. Critics of this decision by the Supreme Court worry about the impact of curtailing the power of federal agencies to regulate areas, including financial institutions, as they now have more power to block regulations. Critics worry of a big spike in lawsuits over actions by federal agencies and President Biden’s administration has warned that overturning Chevron will be a dangerous shock to the legal system.

Rely on Doeren Mayhew’s regulatory compliance specialists to keep you up-to-date on the latest regulations impacting your financial institutions.