Federal Court Halts CFPB Small Business Lending Rule for Some

Monday, a federal district court in Texas delayed the implementation of the CFPB’s small business lending data reporting rule for banks involved in the case. The lawsuit, brought by two banking trade associations and one bank, challenges the validity of the CFPB’s Final Rule implementing Section 1071 of the Dodd-Frank Act. The Court issued an order enjoining the CFPB from implementing and enforcing the rule until the Supreme Court rules on the constitutionality of the CFPB’s funding structure. The Supreme Court is scheduled to hear arguments for the case Oct. 3.

Notes League Chief Advocacy Officer JT Blau: The Texas court recognized the burden financial institutions would face in having to comply with this rule and the harm it would cause. We continue to seek a final rule that represents the least possible burden to credit unions. In addition, this ruling reflects the uncertainty surrounding the CFPB’s rulemaking while the constitutionality of the agency’s funding mechanism is being fought in Court. Your League joined with the other Leagues, CUNA and NAFCU to file an amicus brief ahead of the Oct. 3 court date. It’s worth emphasizing that the injunction issued by the Texas court only applies to plaintiffs in the suit and their member institutions, not all financial institutions subject to the rule.

• Related: Resolution Opposing CFPB Data Requirements Guidance Advances through House Committee
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• Related: Small Business Data Collection: Share Your Concerns With CFPB
• Related: Reminder: Comments Due Jan. 6 on CFPB Small Business Lending Data Collection Proposal
• Related: CUNA files FOIA request with CFPB over section 1071 implementation
• Related: CUNA Backs Section 1071 Reform Legislation
• Related: SCOTUS to Consider Constitutionality of CFPB Funding (NAFCU)
• Related: SCOTUS Will Hear Challenge to CFPB Funding Mechanism (CUNA)