The Consumer Financial Protection Bureau announced that it will deprioritize enforcement of its 1071 small-business lending rule for entities not currently protected by a 5th Circuit Court order.
CFPB Announcement: The agency said it will instead focus its enforcement and supervision resources on pressing threats to consumers, particularly servicemen and veterans.
Background: The U.S. Court of Appeals for the Fifth Circuit on Feb. 7 granted a request by ICBA and other litigants to suspend implementation of the rule pending their ongoing legal challenge to the rule. In granting the motion to stay, the court ordered that “deadlines for compliance with the rule are hereby tolled,” or paused, “but only for plaintiffs and intervenors in this case.”
Details: The CFPB said it will deprioritize enforcement of the rule to avoid “the unfairness of enforcing it against entities not protected by the court’s stay but similarly situated to parties that are protected by the stay.” The agency has not announced any changes to the rule but says it “looks forward to resolving the status of this regulation and ensuring fair, consistent treatment for all entities impacted by the regulation.”
ICBA’s Pending Litigation: The court case has been affected by recent executive developments at the CFPB. After President Donald Trump removed Rohit Chopra as CFPB director, the bureau’s counsel appeared at oral arguments but did not argue the case other than to seek a pause in the proceedings. The counsel ultimately said they did not oppose the plaintiffs’ request to stay the rule’s compliance deadlines while the appeal is pending.
Congressional Effort: The House Financial Services Committee recently advanced ICBA-supported legislation to overturn the 1071 rule. The 1071 Repeal to Protect Small Business Lending Act—introduced by House Small Business Committee Chairman Roger Williams (R-Texas)—would repeal the statute that underlies the CFPB rule.
