Banking groups said their members will have to unnecessarily spend significant time and money if a federal court does not delay the compliance dates of an open banking rule that the CFPB said it intends to rewrite.
"Plaintiffs and their members cannot simply stop all work needed to timely comply with a complex regulation that remains on the books, gambling on the outcome of a process that will last well into 2026 at a minimum," the Bank Policy Institute, Kentucky Bankers Association, and Forcht Bank ("Plaintiffs"), said in a reply brief filed in the U.S. District Court for the Eastern District of Kentucky.
The Plaintiffs filed suit the day the Biden Administration issued the rule, saying that the CFPB had exceeded its authority. Judge Danny C. Reeves issued a stay in the case.
However, the staggered compliance dates set forth in the rule, which are based on asset size for depository institutions and receipt volume for non-depository institution data providers, remain in effect (April 1, 2026, for the first tier of institutions, April 1, 2027, for the second tier of institutions, April 1, 2028, for the third tier of institutions, April 1, 2029. for the fourth tier of institutions, and April 1, 2030, for the final tier of institutions).
The Plaintiffs have asked Judge Reeves to issue a stay to postpone those compliance dates and to enjoin enforcement of the rule until one year after the conclusion of the litigation. No date has been sent for a hearing on the motion.
At first, the Trump Administration agreed that it had exceeded its authority in promulgating the rule and said that it intended to simply kill the rule. More recently, the CFPB stated it was issuing a new rule. Last month, the CFPB issued an Advance Notice of Proposed Rulemaking soliciting comments and data on four specific issues related to the implementation of the agency's open banking rule.
The Plaintiffs said, "In other words, the Bureau will likely begin analyzing comments and formulating a new rule in early 2026 at the soonest, and that process took over nine months for the existing Rule."
The Plaintiffs point out in a status report on the case, that the Bureau has not taken a position on whether to delay the compliance dates.
By contrast, the Financial Technology Association ("FTA"), an intervenor in the case, has said Judge Reeves should not issue a stay on the compliance dates. The FTA supports the rule, as it was written. "The Court should leave the stay in place to allow the rulemaking process to unfold," the FTA said.
The FTA added, "Those delays in full implementation of Section 1033 harm the public interest. And the public interest is best served by allowing the agency's process to unfold in the ordinary course, without injecting this Court into the rulemaking."
The FTA stated that the proper course of action is to maintain the current stay in the case and, at most, require more frequent reporting from the parties in the case.
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