Federal court halts nationwide implementation of CFPB's data collection policy for small businesses
In a significant development, a federal judge has issued a ruling that temporarily suspends the Consumer Financial Protection Bureau's (CFPB) data collection rule for all banks, credit unions, fintechs, and other lenders in the United States.
The ruling, issued by Chief Judge Randy Crane of the U.S. District Court for the Southern District of Texas, comes after oral arguments were heard this month by the Supreme Court regarding the constitutionality of the CFPB's funding structure.
Judge Crane's decision has been met with praise from both the Credit Union National Association CEO and the Independent Community Bankers of America CEO. The former stated that the decision levels the playing field and reduces uncertainty in the marketplace, while the latter confirmed their long-held position and expanded temporary injunctive relief to all community banks across the country.
However, it appears that Senate Republicans may not have enough votes to overrule the CFPB data collection rule. Last week, the Senate voted to repeal the rule using the Congressional Review Act, but the vote was 53-44, falling short of the 60 votes needed to overcome a filibuster.
President Joe Biden has indicated he would not sign off on a challenge to the CFPB data collection rule. Despite this, the CFPB has remained silent on the matter, not commenting to Bloomberg Law.
It's important to note that Judge Crane's July order left non-exempted lenders subject to the CFPB rule. He clarified on Thursday that the CFPB could still field questions and post compliance bulletins and other information on its website. Crane's original stay was set to hold until the Supreme Court made its decision, but he expanded it to apply to all banks, credit unions, fintechs, and other lenders.
Crane asserted that the CFPB's ability to act is a matter of constitutional concern. The CFPB has argued that a nationwide ban would prevent it from answering lenders' questions about compliance with the data collection rule, which took effect in August.
A ruling from the Supreme Court is expected by next spring. Until then, the CFPB data collection rule remains in a state of limbo, with implications for lenders across the nation.
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