The CFPB’s small business lending data collection rule should be set aside, America’s Credit Unions, Cornerstone League, Rally Credit Union, and other organizations wrote in a consolidated motion for summary judgement filed in the U.S. District Court for the Southern District of Texas.
The CFPB finalized its rule requiring financial institutions to collect and report certain data on applications for credit for women-owned, minority-owned, and small businesses in March 2023. Credit unions led a successful push last year to stop implementation of the rule.
“The CFPB decided to ignore all of the warnings regarding costs and instead to require the collection and reporting of 81 data points, whatever the cost and however dubious the benefit. The CFPB did not substantiate that the Final Rule’s requirement that lenders collect 68 additional data points would serve any benefit, and it certainly did not provide a reasonable basis for concluding that any ‘qualitative benefit’ justified the costs,” wrote the organizations. “For this reason, the Final Rule is arbitrary and capricious and should be set aside.”
Specifically, the motion notes the final rule:
- Exceeds the CFPB’s statutory authority;
- Fails to consider significant aspects of stakeholder concerns, and will likely decrease credit availability; and
- Accounts for the costs and benefits of the rule in an “arbitrary and capricious manner” that fails to consider significant real-world costs to regulated financial entities.
The motion is part of America’s Credit Unions’ overall push back against the CFPB’s overreach.
