CUNA-Led Litigation Results in Nationwide Stay of CFPB’s 1071 Rule

Credit unions are now protected by a nationwide injunction preventing implementation of the Consumer Financial Protection Bureau’s Section 1071 rule, thanks to quick legal action by CUNA, Cornerstone League and Rally Credit Union of Corpus Christi, Texas.

The U.S. District Court for the Southern District of Texas issued an order expanding its initial injunctive relief Thursday, meaning the CFPB’s 1071 rule is stayed for all financial institutions covered by the rule.

The court initially issued only a partial injunction applying to American Bankers Association members Texas Bankers Association members, and Rio Bank. CUNA, the Cornerstone League, and Rally Credit Union filed a motion to intervene on Aug. 10, then a joinder to an emergency motion for preliminary injunction on Aug. 14 to obtain parity for credit unions.

“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,” said CUNA President/CEO Jim Nussle. “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, especially when credit union products and services are needed by members and businesses more than ever. Thank you to the Cornerstone League and Rally Credit Union for joining us in this victory for all credit unions that lend to small businesses.”

Related: REGular Blog: More Developments in CFPB Court Cases