Last week, the United States Supreme Court issued its long-awaited decision on the challenge to the CFPB’s funding mechanism, which posed an existential threat to the agency. In short, the Court ruled that the CFPB’s funding does not violate the U.S. Constitution’s Appropriations Clause. Given that several of the CFPB’s recent rulemaking were delayed awaiting the Supreme Court’s decision, though, your next thought may naturally be, “well what’s next?”
Shortly after the ruling, the CFPB issued a statement about the decision, saying that “[T]he CFPB is here to stay.” And that “This ruling upholds the fact that the CFPB’s funding structure is not novel or unusual, but in fact an essential part of the nation’s financial regulatory system, providing stability and continuity for the agencies and the system as a whole.” In essence, the CFPB claims that it’s not going anywhere.
The day following the ruling, the CFPB held a virtual press conference to address industry uncertainty. The CFPB noted that multiple rules are still under challenge in different courts, including the payday lending rule, credit card late fee rule, and, the one everyone asks about, the Section 1071 small business lending rule. The CFPB indicated it would file for motions to lift stays for any matter that was paused in anticipation of the Supreme Court decision, meaning the agency intends to get the implementation of these rules back on its schedule. However, the CFPB also noted that in each of the stayed matters, opposing parties have raised arguments aside from the constitutional argument the Supreme Court just ruled on, and they will need to resume litigation efforts to fight these matters on the merits. Additional rulings in these outstanding cases could further impact the compliance dates or ultimate requirements for the rules, but whether that will happen remains to be seen. The CFPB also noted in its press conference that it anticipated a favorable outcome from the Supreme Court and that it is “firing on all cylinders” and expanding its enforcement department.
Additionally, the CFPB has issued informal guidance and will issue an interim final rule regarding the extension of the 1071 small business lending rule compliance dates. Based on the 290 days between the initial preliminary injunction issued in the Rio Bank/TBA lawsuit and the Supreme Court ruling, the CFPB extended the compliance dates from the original dates. For Tier 1 institutions, the compliance date is extended from October 1, 2024 to July 18, 2025, with the initial filing required by June 1, 2026. For Tier 2 institutions, the compliance date is extended from April 1, 2025, to January 16, 2026, with the initial filing required by June 1, 2027. For Tier 3 institutions, the compliance date is extended from January 1, 2026 to October 18, 2026, with the initial filing required by June 1, 2027.