#2023-18, August 12, 2023

Federal Court Injunction on Consumer Protection Financial Bureau’s (CPFB) Section 1071

Last week, a federal judge granted an injunction delaying the compliance dates for the CPFB Section 1071 final rule while the Supreme Court hears a separate case – involving the same parties - weighing the constitutionality of the CFPB’s funding structure.

The ruling, reportedly made in recognition of potential significant compliance costs that banks are already incurring in anticipation of becoming Section 1071 compliant and beyond, is, at this time, limited to members of ABA and TBA, and allows member institutions belonging to either Association to have the option of delaying their Section 1071 implementation until the funding structure case is decided. This week the Association joined the ABA and 49 other state bankers associations in a letter to CFPB Director Rohit Chopra urging him to delay Section 1071 implementation for all FDIC-insured banks, not just those with memberships to ABA and TBA.

Furthermore, with the Supreme Court’s final decision in the CFPB constitutionality case not likely until the first half of 2024, the CFPB is also now expected to be required to recalculate new Section 1071 compliance dates for those institutions that opt to delay their implementation -- to allow for the same amount of time to comply in recognition of the order.

As the delay is optional for members of ABA or TBA, MBA plans to continue to offer our “1071 Small Business Data Collection” webinar program scheduled for 10:00am on Tuesday, August 15, 2023, to better familiarize members on the final rule itself and its potential compliance-related impacts.

For more information on the injunction click the links below:

• ABA/TBA Letter to CFPB on 1071 Injunction | American Bankers Association - August 3, 2023
• Federal judge delays Section 1071 compliance dates; temporary relief applies only to ABA, TBA members | ABA Banking Journal
• Joint Statement – ABA and TBA
• Read the ABA staff analysis

The Association continues to closely monitor this issue and will provide members with updates as they develop. In the meantime, please do not hesitate to reach out to us if you have any questions.

Democratic Senators Urge Federal Reserve to Review Bank Merger Policy

In a letter this week to Federal Reserve Chair Jerome Powell, Senate Banking Committee Chair Sherrod Brown (D-Ohio) and three other Democratic senators, including Senator Elizabeth Warren (D-Massachusetts), urged the Federal Reserve to “review and reconsider the Federal Reserve’s approach to big bank mergers, including the agency’s framework for evaluating a bank merger’s impact on financial stability.” To read the letter, click here.

Update: Washington Update

August is typically a slow month at the U.S. Capitol with few formal legislative sessions scheduled and as legislators conduct business in their districts. As such, there may not be a Washington Update each week. We look forward to being back in your email inbox on a weekly basis after Labor Day!

As always, don’t hesitate to reach out to us directly with any questions.