The American Bankers Association and Texas Bankers Association are suing the Consumer Financial Protection Bureau to prevent the agency from implementing Section 1071 of the Dodd-Frank Act.
The Texas Bankers Association filed the lawsuit late last month in the U.S. District Court for the Southern District of Texas. The ABA joined the lawsuit May 18.
Section 1071, which was finalized last month, requires collecting and submitting data on credit applications by women-owned, minority-owned and small businesses. Lenders will need to furnish data on loans made to small businesses with less than $5 million in the last fiscal year, submit Congressionally-required data points and provide additional information typically included in lender files.
The CFPB plans to require lenders that originate at least 2,500 small business loans to collect data starting on Oct. 1, 2024. Lenders that originate at least 500 loans annually will need to begin collecting data on April 1, 2025, and those that originate at least 100 annually must collect data starting on Jan. 1, 2026.
The groups requested that the rule be delayed until the Supreme Court rules on the constitutionality of the agency’s funding structure after agreeing to take the case in February.
“CFPB repeatedly exceeds its authorities and ignores required rulemaking law because its unconstitutional funding and leadership structure make it accountable to no one,” said TBA President and CEO Chris Furlow. “It is unfortunate that the courts are currently the only recourse to challenge a virtually untouchable agency that believes it can hold everyone to account but itself.”