ICBA to Congress: CFPB Should Delay 1071 Rule as Supreme Court Considers Constitutionality

March 28, 2023

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Washington, D.C. (March 28, 2023) — The Independent Community Bankers of America (ICBA) today called on the Consumer Financial Protection Bureau to delay the release of its final rule implementing Section 1071 small-business data collection and reporting requirements until the Supreme Court has ruled on the constitutionality of the agency’s funding structure.

Testifying before the House Small Business Committee’s Subcommittee on Economic Growth, Tax, and Capital Access, ICBA Chairman-elect Lucas White said the CFPB should grant a stay until the Supreme Court decides on a lower court ruling that the bureau’s funding structure violates the U.S. Constitution’s separation of powers, given the 1071 rule’s significant impact on small-business lending.

White — the president of The Fountain Trust Co. in Covington, Ind. — also urged policymakers to:

  • Replace the loan-volume exemption and instead exempt banks with $1 billion or less in assets.

  • More accurately define “small business” by using a threshold of $1 million or less in gross annual revenue.

  • Exempt mission-based banks, such as minority depository institutions and community development financial institutions.

  • Implement a staggered implementation date.

  • Pass several bills to mitigate the rule’s adverse impact on small businesses.

“The Section 1071 rule will have a chilling effect on customized lending, compromise borrower privacy in the rural and small-town markets that community banks serve, and reduce access to credit for certain borrowers,” White said. “A stay of the rule would preserve the status quo until the Supreme Court can provide small businesses and community banks with more certainty on the rule before they incur the significant expense and business disruption of compliance.”

Troy Peters, an ICBA community banker who serves as president and CEO of the Jonestown Bank & Trust Co. in Jonestown, Pa., also testified at the hearing on behalf of the ICBA-affiliated state partner Pennsylvania Association of Community Bankers. Peters told the subcommittee that the CFPB’s rule would have a disproportionate impact on community banks, would promote further consolidation in the banking industry, and would raise privacy concerns among small-business borrowers.

Today’s testimony and additional information is available on www.icba.org.

About ICBA

The Independent Community Bankers of America® creates and promotes an environment where community banks flourish. ICBA is dedicated exclusively to representing the interests of the community banking industry and its membership through effective advocacy, best-in-class education, and high-quality products and services.

With nearly 50,000 locations nationwide, community banks employ nearly 700,000 Americans and are the only physical banking presence in one in three U.S. counties. Holding more than $5.8 trillion in assets, over $4.8 trillion in deposits, and more than $3.5 trillion in loans to consumers, small businesses and the agricultural community, community banks channel local deposits into the Main Streets and neighborhoods they serve, spurring job creation, fostering innovation and fueling their customers’ dreams in communities throughout America. For more information, visit ICBA’s website at www.icba.org.