On August 10, two credit union trade associations — Credit Union National Association (CUNA) and Cornerstone Credit Union League — and Rally Credit Union (collectively, Proposed Intervenors) filed an Unopposed Emergency Motion for Leave to Intervene, arguing that they will suffer irreparable harm if the Consumer Financial Protection Bureau (CFPB or Bureau) is not enjoined from enforcing the small business data collection and reporting final rule under § 1071 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Final Rule) against them. This filing comes just three days after CUNA and the National Association of Federally-Insured Credit Unions (NAFCU) sent a joint letter to the CFPB urging it to stay enforcement and implementation of the 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 (discussed here).
The Independent Community Bankers of America, Independent Bankers Association of Texas, and Texas First Bank had filed their own Unopposed Emergency Motion for Leave to Intervene (discussed here) in the same action on August 4.
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, finding the CFPB’s funding structure unconstitutional and, therefore, rules promulgated by the Bureau invalid.
Since the injunction order was entered, the CFPB has been inundated with requests to extend the stay of the Final Rule to all covered small business lenders. 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. On August 8, bankers associations from all 50 states sent a joint letter to the Bureau arguing that relief should be provided to banks nationwide to “be prudent and ameliorate confusion.”
Troutman Pepper will continue to monitor this litigation and provide updates.