CFPB stipulates to Sept. 30 deadline for issuing Section 1071 NPRM

Ballard Spahr LLP

Ballard Spahr LLP

In the lawsuit alleging wrongful delay by the CFPB in adopting regulations to implement Section 1071 of the Dodd-Frank Act, the parties have entered into a stipulation that requires the CFPB to issue a Notice of Proposed Rulemaking (NPRM) by September 30, 2021.

Section 1071 amended the ECOA to require financial institutions to collect and report certain data in connection with credit applications made by women- or minority-owned businesses and small businesses.  Such data includes the race, sex, and ethnicity of the principal owners of the business.  The Stipulated Settlement Agreement in the lawsuit, which the court approved in February 2020, established a timetable for the Bureau to engage in Section 1071 rulemaking and requires the Bureau to provide status reports to the plaintiffs and the court every 90 days until a Section 1071 final rule is issued.

In December 2020, the Bureau released the final report of the SBREFA panel.  The Stipulated Settlement Agreement in the lawsuit required the parties to confer after the completion of the panel report regarding a deadline for the Bureau’s issuance of a NPRM and provided that that if the parties agreed on a deadline, they would jointly stipulate to the agreed date and ask the court to enter that deadline.

When, under former Director Kraninger’s leadership, the CFPB issued its outline of the proposals it was considering in preparation for convening the SBREFA panel, certain of the potential approaches drew strong criticism from consumer advocates.  The Section 1071 NPRM to be issued by the “new CFPB” is likely to be more closely aligned with the views of consumer advocates.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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