The bureau extended the compliance dates amid court orders in ongoing litigation challenging the rule, primarily tied to the outcome of the Supreme Court case on the bureau’s funding structure.
05/31/2024 2:05 P.M.
2 minute read
The Consumer Financial Protection Bureau has issued an interim final rule to extend compliance dates for a rule requiring lenders to disclose credit applications they receive from small businesses, lending decisions and demographic data “in light of court orders in ongoing litigation.”
The rule is to implement Section 1071 of the Dodd-Frank Act directing the bureau to adopt regulations governing the collection of small business lending data.
The final version was released in March 2023 to “to increase transparency in small-business lending, promote economic development, and combat unlawful discrimination.”
Members of Congress are divided on the rule along party lines, and Republicans in the House and Senate have passed resolutions to overturn the rule.
Legal challenges, one in the Eastern District of Kentucky and one in the Southern District of Texas, fought enforcement of the rule because the constitutionality of the CFPB’s funding structure was under review by the U.S. Supreme Court and therefore the bureau shouldn’t have the authority to enact the regulations.
Judges in the Kentucky and Texas cases granted plaintiffs’ injunctions to put the small business lending rule on hold until the Supreme Court decision in Consumer Financial Protection Bureau v. Community Financial Services Association of America Ltd. was issued.
The Supreme Court has now issued its decision in the funding structure case, leaving the state cases open to resume and requirements for compliance with the rule to continue.
While it was pending, the Supreme Court decision was connected to many challenges to CFPB actions and a delay in some actions by the bureau as well—such as the small business lending rule.
The bureau is also expected to advance its Notice of Proposed Rulemaking on the Fair Credit Reporting Act, announce its final rule on a registry of nonbanks with enforcement actions and announce a rule to create a registry on supervised nonbank entities with arbitration agreements in their contracts.
More information about the small business lending rule compliance date extension is available at www.consumerfinance.gov/1071-rule/.
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