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Financial services companies depend on Joe for all aspects of their regulatory and compliance needs. Drawing from two decades of experience in the sector, he provides actionable guidance in a complex and evolving landscape.

In a major victory for small business lenders, yesterday the U.S. District Court for the Southern District of Texas granted motions filed by three groups of trade association intervenors to extend the court’s existing injunction against the Consumer Financial Protection Bureau’s (CFPB or Bureau) enforcement of its final rule under § 1071 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Final Rule) to cover all small business lenders nationwide. A discussion of the preliminary injunction issued by that Texas federal court on July 31 can be found here. The injunction in Texas Bankers Association v. CFPB will dissolve if the U.S. Supreme Court reverses the Fifth Circuit in Community Financial Services Association v CFPB (CFSA case), which found the CFPB’s funding structure unconstitutional.

On October 24, the Federal Reserve Board (Fed), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC) (collectively, the agencies) finally issued their long-awaited final rule modernizing how they assess lenders’ compliance under the Community Reinvestment Act (CRA). The CRA was enacted in 1977 to address systemic inequities in access to credit and encourages banks to meet the credit needs of the entire community, including low- and moderate-income (LMI) communities, consistent with safety and soundness principles. The last meaningful, comprehensive revision to the CRA regulations occurred in 1995.

In the last three weeks, the U.S. Department of Justice (DOJ) reached two more settlements with lenders under its Combatting Redlining Initiative, which began in October 2021. On September 27, the DOJ announced that Washington Trust Company agreed to pay $9 million to resolve allegations that it engaged in redlining majority-Black and Hispanic neighborhoods in Rhode Island. On October 19, the DOJ announced a separate $9 million agreement with Ameris Bank to resolve allegations that it engaged in redlining predominately Black and Hispanic neighborhoods in Jacksonville, Florida. And, according to Attorney General Merrick Garland, this is just the beginning. “[T]he Justice Department currently has over two dozen active investigations into redlining, spanning neighborhoods across the country.”

This summer, Representative Roger Williams (R-Texas) and Senator John Kennedy (R-La.) introduced identical Congressional Review Act (CRA) resolutions in the U.S. House and Senate (H.J. Res. 66 and S. J. Res. 32, respectively) disapproving the Consumer Financial Protection Bureau’s (CFPB or Bureau) 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). Currently, the Senate resolution has not moved beyond introduction, but the House Financial Services Committee recently approved the House resolution to advance. If the resolutions are adopted by both houses of Congress and signed by the President, the Final Rule would be overturned. While that outcome appears unlikely under the current Democratic administration, letters submitted to Congress by banking and credit union trade groups supporting the joint resolution do appear to confirm the nearly unanimous industry opposition to the Final Rule.

On August 18, the American Financial Services Association, Consumer Bankers Association, CRE Finance Council, Equipment Leasing and Finance Association, Mortgage Bankers Association, National Association of Federally-Insured Credit Unions, Truck Renting and Leasing Association, and the U.S. Chamber of Commerce (collectively “the Trades”) 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 to correct the current disparity between those institutions covered by the Texas Bankers Association et al v. CFPB injunction and those that are not covered.

Please join Troutman Pepper Partner Chris Willis and his colleagues Lori Sommerfield and Joe Reilly for an important update on the Consumer Financial Protection Bureau’s (CFPB) new small business lending data collection and reporting final rule — the Section 1071 Final Rule. On July 31, the U.S. District Court for the Southern District of Texas issued a preliminary injunction enjoining the CFPB from implementing and enforcing the Final Rule against members of the American Bankers Association, Texas Bankers Association, and a Texas bank. Chris, Lori, and Joe discuss who benefits from the injunction and what it means for those who do not, advocacy efforts by other financial institution trade groups to level the playing field, the impact on small business borrowers, when we can expect a resolution, and until then, how small business lenders should move forward.

On August 28, the U.S. Department of Justice (DOJ) announced its eighth redlining settlement under its Combatting Redlining Initiative. The settlement between the DOJ and the American Bank of Oklahoma, which originated from a referral by the Federal Deposit Insurance Corporation (FDIC), aims to resolve allegations that the bank engaged in a pattern or practice of lending discrimination by redlining historically Black neighborhoods in the Tulsa, Oklahoma Metropolitan Statistical Area (Tulsa MSA). Under the terms of the proposed consent order, American Bank of Oklahoma will pay more than $1.15 million to resolve the allegations that it engaged in a “pattern or practice” of redlining in violation of the Fair Housing Act and the Equal Credit Opportunity Act.

Earlier this month, the California Department of Financial Regulation and Innovation (CA DFPI) announced a new rule expanding the definition of unfair, deceptive and abusive acts and practices (UDAAP) to commercial financing. Specifically, the rule makes it unlawful “for a covered provider to engage or have engaged in any unfair, deceptive, or abusive act or practice in connection with the offering or provision of commercial financing or another financial product or service to a covered entity.” The new rule also includes annual reporting requirements (described below) for any covered provider who makes more than one commercial financing transaction to covered entities in a 12-month period or who makes five or more commercial financing transactions to covered entities in a 12-month period that are “incidental” to the business of the covered provider. Importantly, this rule does not apply to banks, credit unions, federal savings and loan associations, current licensees of the CA DFPI or licensees of other California agencies “to the extent that licensee or employee is acting under the authority of” the license.

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).

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.”