The Consumer Financial Protection Bureau’s 1071 small-business rule and its implementation deadlines remain on hold for ICBA community banks amid ongoing litigation and a bureau review of the rule.

Suspended Implementation: A federal appeals court in February granted a request by ICBA and other litigants in Texas Bankers Association v. CFPB to suspend implementation of the rule pending their ongoing legal challenge to the rule. The U.S. Court of Appeals for the Fifth Circuit also suspended the rule’s compliance deadlines, but only for members of the plaintiff associations and intervenors in the case—including ICBA members.

‘Deprioritizing’ Enforcement: Amid this suspension for members of ICBA and other co-plaintiff organizations, the CFPB last week announced that it would deprioritize enforcement of the 1071 rule for entities that are outside the existing suspension granted in Texas Bankers Association v. CFPB.

Reopening the Rule: In addition to these developments, the CFPB last month said it will open a new 1071 rulemaking. In a court filing for a separate case brought by the Revenue Based Finance Coalition, the CFPB said it plans to release a new 1071 proposal soon and asked that court—the U.S. District Court for Southern Florida—to suspend further proceedings because the new proposal would make the court case moot.

Bottom Line on Implementation: In other words:

  • The 1071 rule remains on hold for ICBA-member community banks due to the ongoing Texas Bankers Association v. CFPB case involving ICBA and other groups.
  • Last week’s CFPB announcement is designed to ensure entities not covered by this case are not unfairly targeted by the CFPB because they are not expressly protected by the court’s order.
  • The CFPB continues to review its 1071 rulemaking and has said it will issue a new proposal.
  • As a result of ICBA’s legal challenge to the 1071 rule, the compliance deadlines have been extended by at least 374 days and counting, as long as the court’s order remains in place.

Background: The CFPB’s rule—issued in March 2023 under the previous administration—requires lenders to collect and report data on credit applicants, including the race, sex, and ethnicity of the principal owners as well as gross annual revenue.

Congressional Advocacy: The House Financial Services Committee recently advanced the ICBA-advocated 1071 Repeal to Protect Small Business Lending Act to repeal the statute that underlies the CFPB rule. Community bankers can personally urge their members of Congress to pass the legislation by attending next week’s ICBA Capital Summit, scheduled for May 12-15 in Washington, D.C.