08/28/2024 | Press release | Distributed by Public on 08/28/2024 12:11
08/28/24
A federal court has denied a request for summary judgment in a lawsuit filed by the American Bankers Association (ABA), Texas Bankers Association (TBA), and other parties challenging the Consumer Financial Protection Bureau's (CFPB) small business data collection rule. Judge Randy Crane determined that the CFPB acted within its authority when issuing the rule and did not violate the Administrative Procedure Act (APA), which outlines the process agencies must follow when creating regulations. The ABA and TBA shortly after the ruling announced plans to appeal the decision to the Fifth Circuit Court of Appeals.
Last year, the suit was filed contesting the CFPB's final rule under Section 1071 of the Dodd-Frank Act. The plaintiffs argued that the CFPB violated the APA by not adequately considering industry feedback and failing to perform a proper cost-benefit analysis of the rule. Judge Crane dismissed these arguments, stating that regardless of whether "the substance of the Final Rule may be ineffective or counterproductive," the "administrative record is extensive, and the bureau's decision-making process is thoroughly documented." "The court's conclusion does not reflect a stance on the advisability of the final rule," Crane noted. "Even if the rule is ultimately deemed unwise as a policy decision, that does not render it unlawful under the APA." In a joint statement, the plaintiffs emphasized that due to the significant impact the rule could have on small business owners and financial institutions, their legal challenge against Section 1071 is far from over. "Together with our co-plaintiffs, we are preparing for an appeal," they stated.
In related news, The Consumer Financial Protection Bureau opened its beta platform for filng small-business lending data, as required by Section 1071 of the Dodd-Frank Act. The beta is for testing purposes only and financial institutions should not upload actual customer data, the bureau said. Participants will be provided the opportunity to create a login.gov account, upload sample data test files, review validation results and explore the beta platform's features, the CFPB said. The bureau is seeking feedback to identify areas for potential enhancement and improve the data filing process. Teams can work in an early test environment at their own pace and convenience, it added. Data submitted on the beta platform will not be considered for compliance with small-business lending data reporting requirements, the CFPB said. Test files to be used on the platform can be found in the bureau's test file repository.