CFPB Updates Small Business Data Collection Compliance Dates
The CFPB updated compliance dates for regulations issued pursuant to Dodd-Frank Section 1071 ("Small business data collection") that had been stayed pending the outcome of the Supreme Court's decision in CFPB vs. Community Financial Services Association of America, LTD. (See prior coverage.)
The regulations require financial institutions to collect and report data regarding applications for credit for small businesses, including those that are owned by women and minorities. The CFPB stated that the updated compliance dates are as follows: for Tier 1 institutions, (highest volume lenders), the compliance date is extended from October 1, 2024 to July 18, 2025. For Tier 2 institutions, (moderate volume lenders), the compliance date is extended from April 1, 2025 to January 16, 2026. For Tier 3 institutions, (smallest volume lenders), the compliance date is extended from January 1, 2026 to October 18, 2026.
Commentary
Now that the Supreme Court resolved the issue of the constitutionality of the CFPB's funding mechanism in favor of the agency, financial institutions can expect the CFPB to restart implementation and compliance date processes on rules that had been put on hold pending determination. Today's Notice to the District Court of the Southern District of Texas signals a restart of the regulations promulgated under the Dodd Frank small business lending rule that require financial institutions to collect and report data regarding applications for credit for small businesses, including those that are owned by women and minorities. Along with this District Court filing, the CFPB also issued informal guidance, and said it will issue an interim final rule, regarding the extension of the small business lending rule compliance dates. The CFPB stated that the new compliance dates reflects the fact that 290 days have elapsed between the District Court's preliminary injunction and the Supreme Court's decision. (It should be noted that the CFPB's small business lending rule continues to face judicial challenges by financial institutions and interest groups that argue that the rule also constitutes regulatory overreach.)