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A federal court granted an ICBA request to expand injunctive relief from the Consumer Financial Protection Bureau’s Section 1071 final rule to all community banks nationwide.
Court Decision: The U.S. District Court for the Southern District of Texas granted the request from ICBA, the Independent Bankers Association of Texas, and Texas First Bank to provide a nationwide injunction to all community banks and covered financial institutions, ensuring relief is not limited by trade association membership.
ICBA Response: ICBA issued a national news release that said the court rightfully expanded its temporary injunctive relief. In a separate message to community bankers, ICBA President and CEO Rebeca Romero Rainey said staying true to ICBA’s one mission of serving only community banks has once again paid off.
Court Filings: When the CFPB argued in federal court that injunctive relief from the 1071 final rule should be limited to only some banks on the basis of trade association membership, ICBA, IBAT, and Texas First Bank sought injunctive relief for all community banks in a motion to intervene and in a separate complaint filed with the court this summer. ICBA separately sent a letter to the CFPB reiterating its prior calls 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.
Injunction Impact: The court decision reflects ICBA’s position that the implementation of the bureau’s 1071 rule should be suspended until the constitutionality question is resolved. The U.S. Supreme Court is reviewing 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.
Background: 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.
Congressional Advocacy: ICBA continues to strongly support 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 require the CFPB to craft a new rule.
Grassroots Tools: ICBA continues urging community bankers to use its Be Heard grassroots action center to urge their lawmakers to advance the congressional resolutions. ICBA also offers customizable resources that community bankers can use to educate and engage their customers on the ICBA-opposed 1071 rule, including a recently added handout for small-business customers.