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Federal Judge Delays Section 1071 Compliance Dates

Federal Judge Delays Section 1071 Compliance Dates

Posted: Aug 02 2023
A federal judge in Texas has issued an order blocking enforcement of the CFPB’s Section 1071 final rule while the Supreme Court hears a challenge to the constitutionality of the CFPB’s funding structure. The injunction came at the request of the Texas Bankers Association, ABA and McAllen, Texas-based Rio Bank in litigation brought challenging the Section 1071 rule.

While the judge granted request for an injunction, the judge did not accept the request for the injunction to apply to all lenders covered by the rule but chose to provide relief only to TBA and ABA member banks across the country.

The relief applies while the Supreme Court hears the constitutional challenge to the CFPB in CFPB v. Community Financial Services Association of America, which is scheduled to be argued in October and whose decision could be released any time before the end of June 2024, at which point new compliance deadlines would be issued for ABA and TBA members. “Defendants are ordered to extend Plaintiffs and their members’ deadlines for compliance with the requirements of the Final Rule to compensate for the period stayed,” the judge’s order said. The ruling would thus allow members to limit Section 1071 implementation costs until the question of the CFPB’s constitutionality is resolved.
 
TBA and Rio Bank filed their lawsuit in April, and ABA joined the lawsuit in May. While the plaintiffs have expressed support for the goals of Section 1071, the lawsuit argues that the CFPB took a statute requiring just 13 data points to be collected and added more than 80 data points, failing to properly account for the costs and benefits of the bureau’s vastly expanded requirements. The plaintiffs also argued the final rule should be vacated because CFPB is unconstitutionally funded, based on the Fifth Circuit ruling currently being appealed to the Supreme Court
 
To read the order, visit: https://www.aba.com/-/media/documents/amicus-briefs/073123-texas-aba-cfpb-motion.pdf
 
 

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