Trying to keep up with the legal battles surrounding the CFPB and the Section 1071 Rule has been a bit of a challenge as a lot has happened in the last couple of months. Most recently, the Texas District Court (Court) that had previously granted a stay for members of the American Bankers Association and Texas Bankers Association has extended that stay nationwide.
You may also remember that a District Court in Kentucky had previously stopped the CFPB from enforcing the Section 1071 Rule until the Supreme Court rules whether the CFPB’s structure is constitutional. This ruling applied nationwide but did not extend the mandatory compliance dates. The previously mentioned Texas ruling is key because it does delay the compliance dates for all financial institutions based on the length of time it takes the Supreme Court to issue a ruling.
Interestingly enough, it seems like the decision was based, at least in part, on the Court’s determination that treating financial institutions differently goes against what the Section 1071 Rule ultimately seeks to promote. In its decision, the Court noted that the purpose of the Section 1071 rule …is the equal application of lending laws to all credit applicants to avoid disparate outcomes…Thus, it only makes sense that enforcement of the Rule should be applied in the same way to all covered financial institutions.
We’re thankful to see this. While there will still be tiered compliance dates, this will eliminate different treatment of covered financial institutions based on whether an institution is a member of one association or another.
Published
2023/11/07