Exterior of the CFPB headquarters in Washington, D.C.
Credit/Adobe Stock
Months after America's Credit Unions, the Cornerstone League and Rally Credit Union joined banking groups in a lawsuit to stop the CFPB from enacting its small business data-collecting rule, a federal judge in Texas ruled Monday that the Bureau may move forward with its rule.
The CFPB's rule, adopted under Section 1071 of the 2010 Dodd-Frank Act, requires financial institutions to collect and report certain data on applications for credit to women-owned, minority-owned, and small businesses.
The rule is scheduled to go into effect in July 2025.
The rule was initially put on hold in October 2023 as the U.S. Supreme Court was deciding if the CFPB's structure was constitutionally sound. In May, the court ruled the CFPB was on sound legal ground and could continue its funding through the Federal Reserve.
In March of this year, America's Credit Unions, the Cornerstone League and Rally Credit Union joined the American Bankers Association (ABA) and others in filing a consolidated motion for summary judgement. At the time, the groups wrote, "The CFPB decided to ignore all of the warnings regarding costs and instead to require the collection and reporting of 81 data points, whatever the cost and however dubious the benefit. The CFPB did not substantiate that the Final Rule's requirement that lenders collect 68 additional data points would serve any benefit, and it certainly did not provide a reasonable basis for concluding that any 'qualitative benefit' justified the costs. For this reason, the Final Rule is arbitrary and capricious and should be set aside."
Barring any appeals of Monday's ruling, according to America's Credit Unions, the rule will go into effect in the following timeline:
- Tier 1 institutions (highest volume lenders): July 18, 2025, is the new compliance date, with June 1, 2026, as the first filing deadline;
- Tier 2 institutions (moderate volume lenders): January 16, 2026, is the new compliance date, with June 1, 2027, as the first filing deadline; and
- Tier 3 institutions (smallest volume lenders): October 18, 2026, is the new compliance date, with June 1, 2027, the first filing deadline.
The ABA stated Monday that it plans on appealing the ruling.
In a statement, the ABA said, "Given the significant harm small business owners and financial institutions face from this rule, our legal fight challenging 1071 will not end here."
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Michael Ogden
Editor-in-Chief at CU Times. To connect, email at [email protected]. As Editor-in-Chief of CU Times since 2016, Michael Ogden has led the editorial team in all aspects of content strategy and execution, including the creation of the publication’s exclusive and proprietary research database of the credit union industry’s economic landscape. Under Michael’s leadership, CU Times has successfully shifted to an all-digital editorial product with new focuses on the payments, fraud, lending and regulatory beats. Most recently, he introduced a data-focused editorial product for subscribers that breaks down credit union issues into hard data, allowing for a deeper and more factual narrative for readers. In 2024, he launched the "Shared Accounts With CU Times" podcast, which offers a fresh, inside-the-newsroom perspective through interviews with leaders from the credit union industry and the regulatory world. He dives into pressing credit union issues, while revealing the personalities working behind-the-scenes to push the credit union world forward. His background includes years as a radio and TV anchor/reporter and a public relations and digital/social media manager, where he covered the food and music industries, as well as cooperatives and credit unions. Over the years, he has launched numerous exclusive video and podcast series, including a successful series of interactive backstage interviews with musicians at music festivals, showcasing his social media and live streaming production skills.
