The Consumer Financial Protection Bureau (CFPB) has revealed its intention to make changes to the small business loan data collection and reporting rule (1071 Rule) in light of continued opposition from financial institutions throughout the nation. 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.
On April 3, 2025, the CFPB supported the Revenue Based Finance Coalition's motion to stay the compliance date of the 1071 Rule, advising the U.S. District Court for the Southern District of Florida that "CFPB's new leadership has directed staff to initiate a new Section 1071 rulemaking." The agency "anticipates issuing a Notice of Proposed Rulemaking as expeditiously as reasonably possible" and noted that "the anticipated rulemaking process may moot or otherwise resolve" the subject of the litigation. This development aligns with the CFPB's position in other cases challenging this same rule. In a case by the Texas Bankers Association, the U.S. Court of Appeals for the Fifth Circuit tolled the compliance deadlines for plaintiffs and intervenors in the case, with the CFPB's consent. Subsequently, in a case pending before the U.S. District Court for the Eastern District of Kentucky, the CFPB expressed that it would not oppose an extension of the rule's compliance date for all covered entities.
The CFPB's willingness to stay compliance for all covered entities and its representation that forthcoming rulemaking could moot or otherwise resolve pending litigation indicates that the changes to the 1071 Rule will likely address, in whole or in part, concerns raised by the financial services industry. It also reaffirms the CFPB's commitment to maintaining statutory functions with regard to pending challenges to the agency's attempt to scale back operations in light of the Trump Administration's goal of promoting government efficiency.
Though the CFPB has not provided a specific timeline for issuing a Notice of Proposed Rulemaking, the goal to "moot or otherwise resolve" pending litigation signals that changes could be made in the coming weeks and months. Last year, Congress voted to disapprove the 1071 Rule under the Congressional Review Act, but President Joe Biden vetoed the measure, and Congress was unable to override the veto. However, renewed efforts are underway in the current Congress to repeal Section 1071. On April 2, 2025, the House Financial Services Committee advanced legislation to overturn the 1071 Rule. The 1071 Repeal to Protect Small Business Lending Act – introduced by House Small Business Committee Chairman Roger Williams (R-Texas) – would repeal the statutory provision that underlies the rule.
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