A Federal Judge Decided to Uphold CFPB Small Business Data Collection Rule
August 28, 2024
Delaney Sexton
Contributing Editor
A Federal Judge Decided to Uphold CFPB Small Business Data Collection Rule
At the start of this week, a Texas court issued a decision that upholds the legality of the Consumer Financial Protection Bureau’s Small Business Lending Rule. The CFPB issued a rule in March 2023 that requires financial institutions to collect and report demographic information and other data from commercial loan applications. Since its inception, it has been met with strong opposition including from key industry groups such as the American Bankers Association. Banking groups argued that the CFPB rule’s methodology was flawed and would unnecessarily increase loan costs for small businesses.
Previously, the judge granted an injunction that would block the rule until a final decision was issued, but the injunction was reversed this week. Reuters reports that Judge Crane says the arguments against the rule “boiled down to a disagreement with the agency’s determinations rather than a dispute over its statutory authority to adopt it all.”
Judge Crane writes, “It may well be that the final rule proves ill-advised as a policy matter, but that possibility does not itself make the final rule unlawful.”
Though it is becoming more and more likely that the rule will be here to stay, the banking groups said that the case will not end here. They intend to appeal in the future.
Earlier this week, the CFPB launched a beta platform for financial institutions to test data submissions under the small business lending data collection rule. Financial institutions can use the CFPB’s repository of test files or other sample files, but they should not use actual customer data in the submissions. None of the data submitted on the beta platform will be considered for compliance with the reporting requirements.
To access the beta for the Small Business Lending Data Filing Platform, visit https://sbl-beta.cfpb.gov/.
They request that financial institutions testing the beta platform send feedback to the CFPB at SBLHelp@cfpb.gov.