On August 7, the National Association of Federally-Insured Credit Unions (NAFCU) and the Credit Union National Association (CUNA) 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.
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, the American Bankers Association, 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.
In their joint letter, NAFCU and CUNA argue that the preliminary injunction provides plaintiffs and their members with substantial regulatory relief, such as allowing banks to extend implementation timeframes and postpone the upfront cost of system upgrades and staff training, whereas many credit unions under the Final Rule are afforded no such relief despite being, on average, substantially smaller. “Given the effect of the [injunction order] on the overall distribution of compliance burdens across the financial sector, we ask that you consider broader relief.”
Relatedly, 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.