CFPB says it will reopen 1071 rule

The Consumer Financial Protection Bureau said it will open a new rulemaking to implement Section 1071 data collection and reporting requirements for small-business loans.

CFPB Court Filing: In a court filing for a case brought by the Revenue Based Finance Coalition, the CFPB said it plans to release a new 1071 proposal soon. The bureau asked the court—in the U.S. District Court for Southern Florida—to suspend further proceedings because the new proposal would make the court case moot.

ICBA Litigation: That case is separate from current ICBA litigation challenging the 1071 rule, in which the U.S. Court of Appeals for the Fifth Circuit granted a request by ICBA and other plaintiffs to suspend implementation of the rule. In the ICBA case, the court ordered that “deadlines for compliance with the rule are hereby tolled,” or paused.

Plaintiffs’ Arguments: ICBA and the other plaintiffs have argued that the court should set aside the CFPB’s rule because the bureau exceeded its statutory authority, relied on inaccurate and incomplete data to estimate costs, and improperly glossed over litigation and reputational damage costs.

Congressional Effort: Meanwhile, the House Financial Services Committee has 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.

Background: The CFPB’s rule 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.