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A federal judge has issued an injunction delaying the compliance dates of the CFPB's open banking rule ("Rule").
In issuing the injunction, U.S. District Judge Danny C. Reeves of the U.S. District Court for the Eastern District of Kentucky said the bureau has said it is rewriting the Rule that was issued during the Biden Administration. However, the compliance dates of the Rule remain in effect.
The first compliance deadline for the Rule would have been June 30, 2026, and banking plaintiffs said they would have to incur significant costs in meeting the compliance deadlines for a Rule that will never go into effect. And, they said, the administration will not be able to finalize a new Rule by that date and has done nothing to delay that effective date.
"It is unlikely that the CFPB will issue a new Rule before [the first compliance deadline], and it remains unclear whether or when the CFPB will extend the compliance deadlines," Reeves wrote, in issuing the injunction. "The CFPB has stated that it intends to 'comprehensively reexamine' the Rule and 'envisions' adopting a 'new final Rule that substantially revises the Rule under review.'"
The Rule would have had far-reaching implications for financial institutions, fintech companies, and consumers. This previously untapped legal authority would have given consumers the right to control their personal financial data and assign the task of implementing personal financial data sharing standards and protections to the CFPB.
When the Rule was issued on October 22, 2024, it was immediately met with criticism from industry groups. Forcht Bank, the Bank Policy Institute and Kentucky Bankers Association filed a lawsuit the day the Rule was released, seeking injunctive relief, alleging that the CFPB exceeded its statutory authority.
When the Trump Administration took office, the CFPB withdrew the Rule, citing the President's directive to review existing regulations. The CFPB said that the agency had determined that the Rule exceeded the CFPB's statutory authority and was arbitrary and capricious.
Subsequently, the Administration decided to issue a new Rule and requested comments on what that rule should include. However, the CFPB did not extend the compliance deadlines for the original Rule.
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