CFPB proposes new Sec. 1071 rule

The Consumer Financial Protection Bureau proposed a new Sec. 1071 rule last week to replace a Biden-era final rule that led to some association’s challenging it as regulatory over-reach.

Issuance of the new proposed rule is a major victory for community banks and small businesses that would have been subjected to compliance with an 888-page rule and its collection of 81 data points concerning small-business lending. Along with Texas-based Rio Bank, a community bank and minority depository institution based in McAllen, Texas, the Texas Bankers Association filed suit against the CFPB in April 2023 challenging the Sec. 1071 Final Rule.  In May 2023, the American Bankers Association joined as a co-plaintiff. Several other trade groups later intervened in opposition to the rule as well.