House Passes Resolution to Void Section 1071 Rule

The House passed a resolution of disapproval for the Consumer Financial Protection Bureau’s section 1071 rule Friday. The Senate passed the resolution in October and it will now head to President Joe Biden’s desk, who is expected to veto it.

The rule—finalized in March—requires credit unions to collect and report certain data on applications for credit for women-owned, minority-owned, and small businesses.

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In response to the Senate’s vote on S.J. Res 32, the White House issued a statement opposing the resolution and vowing to veto it.

This rule is also the subject of an important case in the federal courts. On Oct. 26, a federal district court in Texas Bankers Association v. CFPB extended its existing injunction against enforcement of the Final Rule to cover all small business lenders nationwide. The injunction will dissolve if the U.S. Supreme Court reverses the Fifth Circuit in Community Financial Services Association v CFPB, which found the CFPB’s funding structure unconstitutional. A decision by the Supreme Court is expected by the summer of 2024.

Your supports CFPB fulfilling its statutory mandate in issuing this rule, but we continue to seek a final rule that represents the least possible burden to credit unions.

"Our concerns remain that the scope of the rule and the regulatory burden it represents might well disincentivize some credit unions from offering small business lending, depriving small businesses of an important source of credit for fueling growth and creating jobs," notes League President/CEO Carrie Hunt. "Credit unions have a strong history of small business lending and have demonstrated that with existing reporting and data."