CFPB Pauses Enforcement of Small Business Lending Rule
Commentary by Steven Lofchie
The CFPB "will not prioritize enforcement or supervision actions" under the Small Business Lending Rule (Regulation B) against small business lenders that are currently outside a Fifth Circuit Court-ordered stay in Texas Bankers Association v. CFPB.
In the unpublished Order, the Fifth Circuit granted Texas Bankers' Motion for a Stay "challenging a rule that required financial institutions to compile and disclose loan-pricing data and the LGBT status of the owners of loan-applicant businesses." (See CFPB Summary of Regulation B here; see also, related coverage.)
In granting the stay, the Court said its decision was not a comment on the ultimate merits of the rule and noted that the CFPB did not oppose the granting of the Stay "to give the Acting Director [of the CFPB] time to consider the issues." The Court said that the stay applies "only [for] the plaintiffs and intervenors in this case," and did not restrict the CFPB from enforcing the rule against other lenders.
In a public statement, the CFPB said it is reallocating enforcement resources to focus on "pressing threats to consumers, particularly servicemen and veterans."
The CFPB added that it "looks forward to resolving the status of this regulation" and aims to ensure "fair, consistent treatment for all entities impacted by the regulation."
Commentary
It is doubtful that the CFPB will have an interest in further defending this Rule against legal challenge. This Administration is not going to advocate for collecting information on either the sexuality or the gender-identity of loan applicants.
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