(C) Common Dreams
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UPDATE 1-US judge in Texas blocks federal consumer regulator's new small business census rule [1]
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Date: 2023-08
(Adds details from ruling, reaction from CFPB, ABA)
July 31 (Reuters) - A federal judge in Texas on Monday issued an injunction barring the top U.S. consumer financial protection watchdog from implementing a long-awaited new rule intended to help prevent gender and racial discrimination in lending to small businesses.
Randy Crane, Chief U.S. District Judge of the Southern District of Texas blocked the Consumer Financial Protection Bureau (CFPB) from implementing the rule citing the pending outcome of a Supreme Court review of the constitutionality of the CFPB's funding structure.
The high court said in February it would hear a case that could threaten the agency's continued ability to function, but it is not likely to issue a decision until next year.
The CFPB declined to comment on Monday. However, the American Bankers Association hailed the ruling, saying it spared the organization's members the "unrecoverable expenses" of complying with a rule which it said the CFPB may not have had the authority to issue.
The CFPB finalized the rule in March, implementing a mandate from Congress created as part of the sweeping Wall Street reform legislation of 2010. It requires banks to collect data on loan applications for women-owned, minority-owned and small businesses, in part to help lenders identify opportunities and business development needs.
The latest decision adds to a history of legal battling over the rule. The CFPB had been under a court-ordered deadline to issue it by March following a lawsuit brought by financial reform advocates against the administration of former President Donald Trump.
The Texas Bankers Association, along with the local lender Rio Bank of McAllen, TX, and the American Bankers Association sued earlier this year, arguing that the cost of complying with the rule - such as hiring, training and software installation - constituted an "irreparable" harm, which the Texas association estimated could amount to $100,000 per community bank.
The ruling also compounded recent legal obstacles facing the CFPB, an agency which has faced persistent legal attacks from financial industry since its creation over a decade ago. Courts in Texas, California and New York have stayed CFPB enforcement actions in recent months, citing the constitutional challenge to its funding structure.
While granting the injunction in favor of Rio Bank and the industry groups and their members, Judge Crane refused to issue a nationwide injunction. The ABA told the court it had "members across the country," however. (Reporting by Douglas Gillison; Editing by Chris Reese and Aurora Ellis)
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[1] Url:
https://finance.yahoo.com/news/1-us-judge-texas-blocks-200606979.html
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