In connection with its regulation titled "Small Business Lending Under the Equal Credit Opportunity Act (Regulation B)," implementing Section 1071 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, 88 Fed. Reg. 35,150 (May 31, 2023), the CFPB announced on April 30, 2025, that it "will not prioritize enforcement or supervision actions with regard to entities that are currently outside the stay imposed under Texas Bankers Association v. CFPB, No. 24-40705 (CA5)." The 1071 Rule, which refers to Section 1071 of the Dodd-Frank Act, requires financial institutions to collect and report loan application data from qualifying small businesses. This mandate has received significant pushback.
Once again, the CFPB stated that it will "instead keep its enforcement and supervision resources focused on pressing threats to consumers, particularly servicemen and veterans," and that it takes "this step in the interest of focusing resources on supporting hard-working American taxpayers, servicemen, veterans, and small businesses."
According to the CFPB, "[e]ven absent resource constraints, [it] would deprioritize enforcement of this rule because of the unfairness of enforcing it against entities not protected by the court's stay but similarly situated to parties that are protected by the stay. The Bureau looks forward to resolving the status of this regulation and ensuring fair, consistent treatment for all entities impacted by the regulation."
As Holland & Knight also previously reported, the CFPB last month revealed its intention to reopen the 1071 Rule in light of continued opposition from financial institutions throughout the nation. At that time, the CFPB indicated that current agency leadership "has directed staff to initiate a new Section 1071 rulemaking," and that a Notice of Proposed Rulemaking would be issued as "expeditiously as reasonably possible."
Notably, as with both the CFPB's April 11, 2025, announcement providing a supervision and enforcement reprieve in connection with the Nonbank Registration Rule (as Holland & Knight previously reported) and the CFPB's March 28, 2025, announcement providing a supervision and enforcement reprieve in connection with the Payday Lending Rule (as Holland & Knight previously reported), this press release also does not impact the ability of state regulators to bring enforcement actions related to violations of the rule, as state regulators may bring federal consumer financial protection claims under Title X of the Dodd-Frank Act, and the rule was promulgated pursuant to such (although, some aspects of the rule were also adopted under the CFPB's more general rulemaking authorities in the Equal Credit Opportunity Act (ECOA)). In addition, although Section 1071 does not explicitly create a private right of action, ECOA, which Section 1071 amended, does provide for a private right of action for violations of its provisions. However, these abilities may be constrained or curtailed, depending on two factors: 1) how the CFPB approaches its reopening of this rule and 2) the success of renewed efforts underway in the current Congress to repeal Section 1071.
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