On August 8, bankers associations from all 50 states sent a joint letter to the Consumer Financial Protection Bureau (CFPB or Bureau) urging it to stay enforcement and implementation of the small business data collection and reporting final rule under § 1071 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Final Rule) for all covered financial institutions until after the U.S. Supreme Court’s final decision in Community Financial Services Association (CFSA) v. CFPB. The banking trade groups argued that relief should be provided to banks nationwide to “be prudent and ameliorate confusion.”

As discussed here, on July 31, a federal district court in the Southern District of Texas issued an order enjoining the CFPB from implementing and enforcing the Final Rule against three plaintiffs — Texas Bankers Association (TBA), the American Bankers Association (ABA), and Rio Bank, McAllen, Texas and their members. However, the district court denied the plaintiffs’ request for a nationwide injunction. The plaintiffs’ complaint relied heavily on the Fifth Circuit’s decision in CFSA v. CFPB, currently pending before the U.S. Supreme Court, finding the CFPB’s funding structure unconstitutional and, therefore, rules promulgated by the Bureau invalid.

On August 2, the TBA and ABA sent their own letter to the CFPB requesting that it extend the stay outlined in the injunction order to all FDIC-insured banks. The 50-state bankers associations referenced this August 2 letter stating, “a stay from the Bureau would streamline administration for the agency after the Supreme Court’s ruling in the [CFSA] case by including all banks and not just those that are members of the TBA or ABA.”

On August 4, Texas First Bank, Independent Bankers Association of Texas, and Independent Community Bankers of America filed an Unopposed Emergency Motion for Leave to Intervene (discussed here) in the Texas federal district court action arguing that they will suffer irreparable harm if the CFPB is not enjoined from enforcing the Final Rule against them as well.

Our Take

As discussed here, the National Association of Federally-Insured Credit Unions and the Credit Union National Association also joined the chorus on August 7 by requesting that the CFPB extend the stay outlined in the preliminary injunction by the Texas federal district court to credit unions. With this increased advocacy pressure now from all 50 state banking associations, it seems likely that the CFPB takes some action to “level the playing field,” either by issuing an amended regulation following public notice-and-comment, or otherwise.