A Texas federal judge Thursday put the Consumer Financial Protection Bureau’s small-business data collection rule on hold nationwide, asserting an earlier injunction he issued — covering only certain banks — allows for a double standard.
Chief Judge Randy Crane of the U.S. District Court for the Southern District of Texas exempted McAllen, Texas-based Rio Bank and members of the American Bankers Association and Texas Bankers Association in July from having to comply with a CFPB rule requiring lenders making at least 100 small-business loans a year to collect race, gender and demographic data from borrowers.
But that July order “leaves non-exempted lenders subject to the discretion of an agency whose very ability to act is a matter of constitutional concern,” Crane wrote Thursday, according to Bloomberg Law.
The Supreme Court heard oral arguments this month in a case concerning the constitutionality of the CFPB’s funding structure. A ruling is expected by next spring.
Crane’s original stay was set to hold until the Supreme Court made its decision. But the judge expanded his injunction Thursday, to apply to all banks, credit unions, fintechs and other lenders over which the CFPB has authority — drawing praise from at least two trade groups.
“Today’s decision levels the playing field when it comes to implementing the CFPB’s rule, which is very important for credit unions facing large compliance costs due to this rule, while also working to serve members,” Credit Union National Association CEO Jim Nussle said in a statement. "The burdensome requirements of this rule — combined with the significant questions about the constitutionality of the CFPB's funding — created too much uncertainty in the marketplace.”
Independent Community Bankers of America CEO Rebeca Romero Rainey said Thursday’s move confirms “what [ICBA] has long said” and “rightfully expanded … temporary injunctive relief … to all community banks across the country.”
The CFPB declined to comment to Bloomberg Law.
The bureau has argued that a nationwide ban would keep it from answering lenders’ questions about compliance with the data collection rule, which took effect in August. Crane clarified Thursday that the CFPB could still field questions and post compliance bulletins and other information on its website.
The CFPB’s data collection rule has drawn objections outside the courtroom, too. The Senate last week voted 53-44 to repeal the measure using the Congressional Review Act. President Joe Biden, however, has indicated he would not sign off on a challenge to the CFPB data collection rule. And Senate Republicans likely don’t have enough votes to overrule it.
