May 10 (Reuters) - A federal judge in Texas on Friday

halted the Consumer Financial Protection Bureau's new rule

capping credit card late fees at $8, a victory for business and

banking groups challenging part of the Biden administration's

crackdown on "junk fees."

U.S. District Judge Mark Pittman in Fort Worth issued a

preliminary injunction preventing the rule from taking effect

next week. The injunction was sought by groups including the

U.S. Chamber of Commerce and the American Bankers Association.

Pittman, appointed by Republican then-President Donald

Trump, cited a 2022 ruling by the New Orleans-based 5th U.S.

Circuit Court of Appeals, which found the CFPB's funding

structure unconstitutional.

"Consequently, any regulations promulgated under that regime

are likely unconstitutional as well," Pittman wrote. "Thus,

Plaintiffs establish a likelihood of success on the merits."

The U.S. Supreme Court is reviewing the 2022 ruling, and

during oral arguments in October appeared wary of upholding it.

Pittman remains bound by the ruling because his court is in the

5th Circuit's jurisdiction.

Maria Monaghan, counsel to the U.S. Chamber of Commerce

Litigation Center, in a statement called Pittman's decision "a

major win for responsible consumers who pay their credit card

bills on time and businesses that want to provide affordable

credit."

A CFPB spokesperson said the regulator will keep defending

the rule, saying "consumers will shoulder $800 million in late

fees every month that the rule is delayed - money that pads the

profit margins of the largest credit card issuers."

The rule has the backing of President Joe Biden, a Democrat.

White House spokesperson Jeremy Edwards in a statement called

the ruling disappointing, saying the CFPB's rule is "a critical

measure to save American families billions in junk fees."

The CFPB adopted the rule to counteract what it called

"excessive" fees that credit card issuers charge for late

payments.

The rule would block card issuers with more than 1 million

open accounts from charging more than $8 for late fees, unless

they could prove higher fees are necessary to cover their costs.

According to the CFPB, issuers collected more than $14

billion worth of credit card late fees in 2022, with an average

fee of $32.

Business and banking groups sued in March to block the rule.

The case had been delayed in a jurisdictional back-and-forth

over whether the case should remain in Texas, after Pittman

initially transferred it to Washington, D.C.

A 5th Circuit panel dominated by Trump appointees ultimately

reversed that decision and last week gave Pittman a May 10

deadline on whether to issue an injunction.

Pittman in Friday's order expressed concern over the 5th

Circuit's rulings in the case and said he still believed a judge

in Washington could have him himself issued a "just and fair"

ruling. "We must trust the system," he said.