Recently, we published a blog post in which I urged the CFPB to agree to extend the relief granted by the Texas federal district court in the lawsuit challenging the CFPB’s final small business lending rule (Rule) to all entities covered by the Rule. 

The court issued an order that preliminarily enjoins the CFPB from implementing and enforcing the Rule “pending the Supreme Court’s reversal of [Community Financial Services Association of America Ltd. v. CFPB], a trial on the merits of this action, or until further order of this Court.”  However, the court denied the plaintiffs’ request for nationwide injunctive relief and granted injunctive relief only to the plaintiffs and their members.  The plaintiffs are the Texas Bankers Association (TBA), the American Bankers Association (ABA), and Rio Bank, McAllen, Texas.  Thus, in addition to Rio Bank, the injunctive relief granted by the court extends only to the TBA, ABA, and members of TBA or ABA.  The court also stayed the deadlines for compliance with the Rule’s requirements pending the Supreme Court’s decision in CFSA and extended the deadlines for compliance in the event of a reversal in CFSA but also limited that relief to the plaintiffs and their members.

In my blog post, I discussed the various problems created by the limited relief, such as disparate treatment of the many non-banks, credit unions, and small community banks that are unlikely to be members of the ABA or TBA.  I commented that all of these problems could easily be avoided by the CFPB doing the right thing — namely extending the relief to everyone covered by the Rule, regardless of whether they are members of the ABA or TBA.

I learned today that, unbeknownst to me when I wrote my blog post, the ABA and TBA have sent a letter to Director Chopra in which they urge the CFPB to extend the stay granted by the court to all FDIC-insured banks.  They state that “[w]hile most FDIC-insured banks fall within our membership, there are some that do not.”  The associations do not ask the CFPB to extend the relief to non-banks or credit unions.  Instead, they state: “[w]e recognize the Bureau’s desire to continue pressing forward with certain covered institutions and so are only asking for your consideration of extending the stay to the banking industry.”  The trade groups comment that “[n]ot only would a stay from the Bureau streamline administration for the agency after the Supreme Court’s ruling in the Community Financial case, it could also address concerns of other potential banking plaintiffs who may consider bringing additional litigation under current circumstances.”

While we support the trade groups’ letter, we believe that the relief should also be available to credit unions and non-banks.  I would hope that other trade associations whose members include these entities will also reach out to Director Chopra to urge the CFPB to extend the relief to include all entities covered by the Rule. 

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