NEWS: In light of last week’s U.S. Supreme Court decision (which we covered in this Compliance Courier) that the Consumer Financial Protection Bureau’s (CFPB’s) funding mechanism is constitutional, the Bureau has announced new effective dates for its small business lending rule.
The rule, summarized in The League’s ii Release No. B083, implements Section 1071 of the Dodd-Frank Act and is sometimes called the 1071 rule. It requires many financial institutions to collect and report data on lending to small businesses with gross revenue of $5 million or less. The rule is designed to help regulators and others uncover discrimination in small business lending.
In October 2023, a federal court blocked the CFPB from enforcing the rule, pending the U.S. Supreme Court case, as explained in this Compliance Courier.
Now that the Supreme Court has released its opinion, the CFPB has published informal guidance and will issue an interim final rule, extending compliance dates for the rule:
- For Tier 1 institutions (highest volume vendors), the compliance date is extended from Oct. 1, 2024 to July 18, 2025, with the initial filing being required by June 1, 2026.
- For Tier 2 institutions (moderate volume lenders), the compliance date is extended from April 1, 2025 to Jan. 16, 2026, with the initial filing required by June 1, 2027.
- For Tier 3 institutions (lowest volume lenders), the compliance date is extended from Jan. 1, 2026 to Oct. 18, 2026, with the initial filing required by June 1, 2027.
Status of other rules
Several CFPB rules still face challenges in different courts, including the payday lending rule and the credit card late fee rule. Courts temporarily halted those cases until the Supreme Court issued its decision. Last week, the CFPB held a virtual press conference to address the status of those rules, as well as 14 pending CFPB enforcement actions that courts have also put on hold.
The CFPB said that it will ask the courts to resume litigation. The Bureau noted, however, that each case involves issues other than the constitutionality of the CFPB’s funding. Additional ruling in those cases could change the rules’ compliance dates or requirements.
The League will let you know about developments on those pending CFPB rules.