On July 31 2023, the ABA Banking Journal published an article announcing a Federal judge’s decision to block the enforcement of the Consumer Financial Protection Bureau’s Section 1071 final rule while the Supreme Court hears a challenge to the constitutionality of the CFPB’s funding structure. This delay, however, does not apply to all financial institutions. According to the ABA Banking Journal, the injunction came at the request of the American Bankers Association, the Texas Bankers Association and McAllen, Texas-based Rio Bank in litigation brought challenging the Section 1071 rule.
The ABA Banking Journal article states that the judge granted ABA and TBA’s request for an injunction but did not accept their request for the injunction to apply to all lenders covered by the rule. The delay will only apply to TBA and ABA member banks.
In April 2023, TBA and Rio Bank filed their lawsuit and ABA joined the lawsuit shortly thereafter. The ABA Banking Journal article states that while the plaintiffs have expressed support for the goals of Section 1071, the lawsuit argues that the CFPB took a statute requiring just 13 data points to be collected and added more than 80 data points, failing to properly account for the costs and benefits of the bureau’s vastly expanded requirements. TBA, ABA and Rio Bank also argued the final rule should be vacated because CFPB is unconstitutionally funded, based on the Fifth Circuit ruling currently being appealed to the Supreme Court.
According to the ABA Banking Journal’s release, the injunction applies while the Supreme Court hears the constitutional challenge to the CFPB in an amicus brief filed by Community Financial Services Association of America and other associations including the ABA. The brief is scheduled to be argued in October and the decision could be released any time before the end of June 2024, at which point new compliance deadlines would likely be issued for ABA and TBA members.
As we are not attorneys and this is not legal advice, those seeking more information regarding the 1071 stay should seek legal counsel.
Read the ABA’s press release here.
The brief of amici curiae can be found here.