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Banking Groups Push for Delay 1071 Rule

The CFPB should wait until the Supreme Court rules on its funding, say industry bodies

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  • Written by  Banking Exchange staff
Banking Groups Push for Delay 1071 Rule

Several banking industry organizations have written to the Consumer Financial Protection Bureau (CFPB) urging it to delay the implementation of a rule relating to small business reporting.

The American Bankers Association (ABA) and Texas Bankers Association jointly called on CFPB director Rohit Chopra to pause the implementation of the 1071 Final Rule.

Separately, the Independent Community Bankers of America (ICBA) has also written to the CFPB with a similar request.

The 1071 rule emanates from the Dodd-Frank Act and is aimed at increasing the reporting of how banking services are supplied to women-owned and minority-owned businesses, as well as small businesses more broadly.

However, banks have long argued that the CFPB’s proposed implementation of the rule places too great a reporting burden on small businesses and banks.

At the same time, banking groups are challenging the funding model of the CFPB through the US Supreme Court — which they claim is unconstitutional — and last week argued that the 1071 rule’s implementation should be delayed while this case is resolved.

The ICBA along with Independent Bankers of Texas and Texas First Bank additionally filed a motion and complaint against the CFPB with the US District Court for the Southern District of Texas late last week, seeking “preliminary and permanent injunctive relief”.

The court previously allowed the plaintiffs in this case to be given relief from the implementation of the 1071 rule, but the ICBA and the Texas organizations called for the relief to be extended to all community banks across the country.

ICBA president and CEO Rebeca Romero Rainey said: “By arguing that the U.S. District Court for the Southern District of Texas preliminary injunction should apply only to the plaintiffs in the case before that court, the CFPB has created an unlevel regulatory playing field that poses harm to community banks and small businesses across the country. While the court addresses its recent temporary injunction, the CFPB should do the right thing and stay its final rule.”

The ABA’s request is similar, as the judge in this case also granted relief only to the plaintiffs and not to the entire banking sector. The ABA has requested that the CFPB exempt all regulated banks while the ongoing issues are resolved.

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