As previously reported, in late December 2023 President Biden vetoed legislation adopted by the U.S. House of Representatives and U.S. Senate under the Congressional Review Act to override the CFPB’s final Section 1071 small business lending rule (1071 Rule). The vote in the House was 221-202 and the vote in the Senate was 53-44.… Continue Reading

Revenue Based Finance Coalition (RBFC), a trade group whose members include non-banks that provide sales-based financing to businesses, filed a lawsuit last week against the CFPB in a Florida federal district court challenging the CFPB’s final small business lending rule implementing Section 1071 of Dodd-Frank.  The core argument made by RBFC is that because sales-based financing does not constitute “credit” within the meaning of the Equal Credit Opportunity Act (ECOA) and Regulation B, the CFPB did not have the authority to regulate sales-based financing as “credit” under the Rule.… Continue Reading

As previously reported, the U.S. House of Representatives, by a vote of 221-202, voted under the Congressional Review Act to override the CFPB’s final Section 1071 small business lending rule (1071 Rule), and the U.S. Senate, by a vote of 53-44, voted to do the same. As was expected, on December 19, 2023 President Biden vetoed the legislation.… Continue Reading

Last week, by a vote of 221-202, the House of Representatives voted to approve S.J. 32, the resolution introduced under the Congressional Review Act to override the CFPB’s final Section 1071 small business lending rule (1071 Rule).  The Senate voted to approve S.J. 32 in October 2023.  President Biden is expected to veto the resolution and there is unlikely to be sufficient votes to override his veto. … Continue Reading

The Texas federal district court hearing the lawsuit challenging the validity of the CFPB’s final rule implementing Section 1071 of the Dodd-Frank Act (Rule) has issued an order that preliminarily enjoins the CFPB from implementing and enforcing the Rule on a nationwide basis against all entities covered by the Rule.  On July 31, the court had denied the request of the plaintiffs in the lawsuit for nationwide preliminary relief and instead issued an order that granted preliminary relief only to the plaintiffs and their members. … Continue Reading

Yesterday, by a vote of 53-44, the Senate voted to approve S.J. 32, the resolution introduced under the Congressional Review Act (CRA) to override the CFPB’s final Section 1071 small business lending rule (1071 Rule).

The Senators voting for the resolution included three Democratic Senators (Senators Hinckenlooper, Manchin, and Tester) and the two Independent Senators (Senators King and Sinema). … Continue Reading

On September 14, 2023, the CFPB released Frequently Asked Questions (FAQs) regarding the Small Business Data Collection Rule (the “Rule”). These FAQs are in addition to the set published in June 2023, which are dated. Some, but not all, of the FAQs are discussed below.

Covered Credit Transactions

A few of the updated FAQs relate to the definition of a “covered credit transaction,” which includes the following topics:

  • Consumer-designated credit: The FAQs reiterate that consumer-designated credit is excluded from the Rule, even if the proceeds are used for business or agricultural purposes, as long as the credit is offered or extended primarily for personal, family or household purposes.
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We recently reported that a federal district court in Kentucky enjoined the CFPB from implementing the small business data collection and reporting rule, also referred to as the 1071 rule based on the Dodd-Frank section requiring the rule (the “Rule”). Unlike a similar injunction against the rule issued by a federal district court in Texas, the preliminary injunction issued by the Kentucky court is not limited to the members of the plaintiff trade associations and the plaintiff banks.… Continue Reading

On September 14th, the Federal District Court for the Eastern District of Kentucky granted the plaintiff’s motion to preliminarily enjoin the CFPB from implementing the Small Business Lending Rule (“Rule”) promulgated under section 1071 of the Consumer Financial Protection Act. As a reminder, the plaintiffs in the Kentucky lawsuit are the Kentucky Bankers Association and several Kentucky banks.… Continue Reading

Last week, three farm credit trade associations filed the latest in a series of unopposed emergency motions for leave to intervene in the Texas case challenging the Consumer Financial Protection Bureau’s (“CFPB”) final small business lending rule implementing Section 1071 of the Dodd-Frank Act (Rule). The intervenors – the Farm Credit Council, Texas Farm Credit, and Capital Farm Credit (collectively, “Farm Credit Intervenors”) – argue that the Rule imposes substantial burdens on agricultural lenders and the institutions that support them, and that the members they represent will suffer disproportionately, as the majority of their loans go to small businesses, such as farmers, ranches, and agribusinesses, covered by the Rule.… Continue Reading