ICBA Advocacy Leads to Nationwide Community Bank Relief from 1071 Small-Business Rule

Washington, D.C. (Oct. 26, 2023)—The Independent Community Bankers of America (ICBA), the Independent Bankers Association of Texas (IBAT), and Texas First Bank today announced that the U.S. District Court for the Southern District of Texas has granted their request to expand injunctive relief from the Consumer Financial Protection Bureau’s Section 1071 final rule. Today’s court decision provides a nationwide injunction to all community banks and covered financial institutions, ensuring relief is not limited by trade association membership.

“Responding to motions filed by ICBA, IBAT, and Texas First Bank, the U.S. District Court has rightfully expanded its temporary injunctive relief from the CFPB’s Section 1071 final rule to all community banks across the country,” ICBA President and CEO Rebeca Romero Rainey said. “In the motions and in a separate letter to the CFPB, ICBA reiterated what it has long said — the implementation of the bureau’s 1071 rule should be suspended for all community banks subject to the final rule until the courts decide on the constitutionality of the agency’s funding structure.”

In a motion to intervene and in a separate complaint filed with the court, ICBA, IBAT, and Texas First Bank sought injunctive relief from the 1071 rule for all community banks. ICBA separately sent a letter to the CFPB reiterating its call for the agency to stay the effective date of its 1071 rule for all covered financial institutions pending a court challenge to the constitutionality of the bureau’s funding structure. As ICBA told the CFPB in a March letter, a stay would provide regulatory certainty while the U.S. Supreme Court reviews a U.S. Court of Appeals for the Fifth Circuit decision that the CFPB’s funding structure violates the Constitution’s appropriations clause and separation of powers.

The CFPB’s 1071 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. While the CFPB has the authority to exempt any class of financial institutions from the standards it develops and to limit mandatory data points to those required by the law, it has opted to apply the rule to the vast majority of community banks and to require data points far exceeding those required by law.

ICBA has long opposed the 1071 small-business data collection and reporting requirements and strongly supports a congressional resolution to nullify the rule, which passed through the Senate earlier this month and through the House Financial Services Committee in July. The resolution would reverse the harm of the rule and require the CFPB to craft a new rule that preserves the flow of credit to small businesses.

ICBA will continue working with policymakers to enact relief from the 1071 rule for community banks nationwide to ensure these local institutions can continue meeting the needs of the nation’s small businesses.

About ICBA
The Independent Community Bankers of America® creates and promotes an environment where community banks flourish. ICBA is dedicated exclusively to representing the interests of the community banking industry and its membership through effective advocacy, best-in-class education, and high-quality products and services.

With nearly 50,000 locations nationwide, community banks constitute roughly 99 percent of all banks, employ nearly 700,000 Americans and are the only physical banking presence in one in three U.S. counties. Holding nearly $5.9 trillion in assets, over $4.9 trillion in deposits, and more than $3.5 trillion in loans to consumers, small businesses and the agricultural community, community banks channel local deposits into the Main Streets and neighborhoods they serve, spurring job creation, fostering innovation and fueling their customers’ dreams in communities throughout America. For more information, visit ICBA’s website at www.icba.org.

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