Page 4 - May 23, 2024 Bulletin

BANKING
ARTICLES

CFPB Pushes Back Section 1071 structure was unconstitutional because Congress ceded direct
Compliance Deadlines control over the agency’s budget by insulating it from annual
appropriations. The majority of Supreme Court justices rejected
The CFPB has announced that it has pushed back the compliance that argument in their decision.
deadlines by several months for its Section 1071 small-business “Under the Appropriations Clause, an appropriation is simply a
data collection rule in response to litigation. law that authorizes expenditures from a specified source of public
The compliance deadline for Tier 1 institutions is now July money for designated purposes,” said Justice Clarence Thomas,
18, 2025, with the first filing deadline on June 1, 2026. The writing for the majority. “The statute that provides the bureau’s
compliance deadline for Tier 2 institutions is Jan. 16, 2026, with funding meets these requirements.”
the first filing deadline June 1, 2027. The compliance deadline for The funding argument was referenced in the three other ongoing
Tier 3 institutions is Oct. 18, 2026, with the first filing deadline lawsuits against the bureau, but those cases relied on other legal
also June 1, 2027. arguments and will continue to be litigated on those other
A federal court in Texas stayed implementation of the rule grounds.
pending the outcome of a separate Supreme Court case involving Read more: https://www.supremecourt.gov/opinions/23pdf/22-448_
the constitutionality of the CFPB’s funding, with the high o7jp.pdf
court upholding the bureau’s funding structure. The Texas court
ordered the CFPB to extend the rule’s compliance deadlines to OCC Must Fight States
compensate for the period stayed, the bureau said. Encroaching on National Bank
Read more: https://www.consumerfinance.gov/1071-rule/
Oversight
Supreme Court Upholds CFPB NDBA joined the ABA and the other 51 state bankers’
Funding Structure associations in urging the OCC to defend its regulatory authority
against state attorneys general and lawmakers. During 2024
In a 7-2 decision, the U.S. Supreme Court ruled that the state legislative sessions, several states considered – and a few
mechanism Congress established to fund the CFPB does not enacted – legislation that would allow state regulators to establish
violate the Appropriations Clause of the Constitution. Beyond and enforce safety and soundness standards for national banks,
the legal questions addressed in the case, the decision has including standards dictating when a bank can deny or terminate
implications for three other legal actions against the CFPB: financial services for current or prospective customers.
the legal challenges to the Section 1071 small business data
collection final rule, the bureau’s credit card late fee final rule and The associations in their letter said that competition among state-
the CFPB’s update to its UDAAP manual. Those matters will chartered and national banks is vital to the U.S. economy, and
proceed on other legal grounds. that dual-chartering framework depends on the OCC defending
its nearly exclusive national bank visitorial powers from state
The CFPB receives its funding directly from the Federal Reserve authorities and “preserving the essential powers of national banks
based on a request from the bureau’s director. In CFPB v. amid a range of harmful and often conflicting state laws.”
Community Financial Services Association of America, the Fifth
Circuit Court of Appeals in 2022 ruled that such a funding

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