The CFPB has filed its fifth status report with the California federal district court as required by the Stipulated Settlement Agreement (Agreement) in the lawsuit filed against the Bureau in May 2019 alleging wrongful delay in adopting regulations to implement Section 1071 of the Dodd-Frank Act.
Section 1071 amended the ECOA to require financial institutions to collect and report certain data in connection with credit applications made by women- or minority-owned businesses and small businesses. Such data includes the race, sex, and ethnicity of the principal owners of the business. The Stipulated Settlement Agreement, which the court approved in February 2020, established a timetable for the Bureau to engage in the Section 1071 rulemaking and required the Bureau to provide status reports to the plaintiffs and the court every 90 days until a Section 1071 final rule is issued.
The CFPB has satisfied the first three deadlines in the Stipulated Settlement Agreement which relate to the SBREFA process. In September 2020 and October 2020, the Bureau satisfied the Agreement's first two deadlines regarding, respectively, the Bureau's release of a SBREFA outline of proposals under consideration and the convening of a SBREFA panel. In December 2020, the Bureau released the final report of the SBREFA panel, thereby satisfying the Agreement's third deadline.
The next step mandated by the Agreement is for the parties to confer after the completion of the panel report regarding a deadline for the Bureau's issuance of a Notice of Proposed Rulemaking (Section 1071 NPRM). The Agreement provides that if the parties agree on a deadline, they will jointly stipulate to the agreed date and ask the court to enter that deadline. Also, at any time that is more than 30 days after completion of the panel report, the plaintiffs can notify the Bureau that they want to ask the court to set a deadline.
In the new status report, the Bureau states:
The Bureau is continuing to work on the significant legal and policy issues that must be resolved to implement the Section 1071 regulations. As part of that process, the Bureau's rulemaking staff has been briefing the Bureau's new leadership regarding those issues to obtain policy decisions that are necessary for the preparation of the Notice of Proposed Rulemaking for the Section 1071 regulations.
The Bureau also states that "the parties have met and conferred regarding an appropriate deadline for issuance of the Section 1071 NPRM," and that pursuant to the Agreement, if the parties agree on a deadline, they will jointly stipulate to the agreed date and request that the court enter that deadline.
In his publicly-shared statement to the staff of the Bureau's Division of Research, Markets, and Regulations (RMR) outlining his regulatory priorities, Acting CFPB Director Uejio indicated that he has "pledged RMR the support it needs to implement [section 1071] without delay." Mr. Uejio's interest in prioritizing the Section 1071 rulemaking is likely to be shared by Rohit Chopra, if confirmed as CFPB Director. In addition, a Section 1071 NPRM issued under new CFPB leadership will likely be more closely aligned with the views of consumer advocates than an NPRM issued under former Director Kraninger's leadership would have been. As a result, the plaintiffs can be expected to take a cooperative approach with new CFPB leadership regarding the timing of a Section 1071 NPRM.
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