Sunday, April 14, 2024
Gavel and Flag

ABA joins Texas lawsuit to block CFPB’s Section 1071 rule

The American Bankers Association has joined a lawsuit filed by the Texas Bankers Association and McAllen, Texas-based Rio Bank challenging the Consumer Financial Protection Bureau’s final rule implementing Section 1071 of the Dodd-Frank Act.

ABA president and CEO Rob Nichols made the announcement of his association joining the legal fight during the TBA’s annual convention in San Antonio late last week.

Section 1071 requires the collection and submission of data related to credit applications by women-owned, minority-owned and small businesses. The lawsuit, filed in the Southern District of Texas by the TBA and McAllen, Texas-based Rio Bank, argues the Section 1071 final rule goes well beyond the 13 data points specified in the Dodd-Frank Act to impose a final rule that “requires banks to develop and implement new software and compliance mechanisms to address over 80 reporting requirements that have been exponentially grown by the CFPB since the Act requiring this Rule was passed.”

The plaintiffs contend the significant reporting requirements will force some community banks out of small business lending altogether, which would only harm women-owned and minority-owned small businesses.