A Texas court this week expanded a preliminary injunction on enforcement of the CFPB’s Section 1071 small business data collection rule to include all financial institutions covered by the rule. The U.S. District Court for the Southern District of Texas in July granted the injunction to ABA and Texas Bankers Association members in a lawsuit over the rule brought by the associations and the McAllen, Texas-based Rio Bank. ABA and TBA asked at the time for the injunction to apply to all FDIC-insured institutions, but the judge sided with a CPFB request to limit the order to association members.
The expanded injunction, sought by credit unions and banks not covered by the original order, has no such limitations. The relief applies while the U.S. Supreme Court hears a constitutional challenge to the CFPB’s funding structure in a separate case, CFPB v. Community Financial Services Association of America, with a decision possibly coming before the end of June 2024. ABA and TBA in August asked CFPB Director Rohit Chopra to voluntarily delay the implementation of Section 1071 for all banks not covered by the original injunction.
“Since we launched our legal challenge over the CFPB’s 1071 final rule back in April, TBA and ABA have argued for every bank in the country to get relief from this over-reaching rule, which we firmly believe violates the law and will harm the very small businesses it is intended to help,” ABA and TBA said in response to the most recent court order. The groups added that they welcomed the expansion, “which ensures that every FDIC-insured institution will receive the benefits of this injunction regardless of affiliation.”