Tag Archive for: Section 1071

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CFPB Issues Interim Final Rule for Section 1071 Small Business Lending Data Collection

By Scott Birrenkott

On June 18, 2025, the Consumer Financial Protection Bureau (CFPB) issued an interim final rule (IFR) amending the compliance deadlines for its Section 1071 small business lending data collection rule (1071). This latest development marks yet another chapter in the long and complex implementation process of Section 1071, which was first introduced under the Dodd-Frank Act more than a decade ago.

Because Section 1071 was enacted by Congress as part of the Dodd-Frank Act, CFPB is statutorily required to implement the provision through rulemaking. The 1071 rule is designed to increase transparency in small business lending by requiring financial institutions to collect and report data on credit applications from small businesses, including demographic information about the principal owners. The goal is to facilitate enforcement of fair lending laws and enable better policymaking. However, it also presents significant operational changes given the impact collection and reporting has on the business of lending.

Initially finalized in March 2023, the rule’s implementation was quickly met with legal challenges. In particular, the American Bankers Association and Texas Bankers Association filed suit in federal court, resulting in a preliminary injunction issued in July 2023. That injunction paused enforcement of the rule for the plaintiffs in the case and was later extended nationwide while the U.S. Supreme Court considered the constitutionality of the CFPB’s funding structure in a separate case. That constitutional question was resolved in CFPB’s favor in May 2025, clearing the way for 1071 to move forward.

The newly issued IFR responds to the delay caused by the litigation. It provides a revised set of tiered compliance dates, offering additional time for lenders depending on their volume of covered originations. While the Bureau largely maintained the original structure of its implementation timeline, each compliance tier has been pushed back to account for the injunction period.

Notably, the IFR does not address other stakeholder concerns raised during the comment process or litigation. CFPB has indicated that it expects lenders to begin preparing for compliance based on the revised dates and existing rule framework. Still, the legal battle may not be over. On July 25, 2025, a coalition of community advocacy groups filed a new lawsuit seeking to force the CFPB to implement the rule more quickly, citing harm to small businesses from the continued delay. The outcome of this latest suit remains to be seen.

Most recently, on August 1, 2025, the CFPB filed a status report with the Fifth Circuit Court of Appeals in the pending litigation (Texas Bankers Association v. CFPB) outlining further steps the agency is taking. CFPB confirmed that its new leadership has formally directed staff to initiate a new Section 1071 rulemaking, signaling that changes to the 2023 rule may be on the horizon. Thus, the IFR extension creates somewhat of a limbo, where the industry is still waiting to see what action CFPB will take with respect to 1071. Given the change in the Administration, the litigation status, news and expectations of a new proposed Section 1071 rule, WBA’s recommendation at time of publication of this article is that banks should take a temporary pause pending forthcoming rulemaking.

For more specific details on the new timelines see the June 2025 WBA Compliance Journal.

Birrenkott is the WBA director – legal

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Executive Letter: New Section 1071 Proposed Rule Expected Soon

From the Desk of Rose Oswald PoelsBy Rose Oswald Poels

In court filings last week involving the Bureau of Consumer Financial Protection’s (CFPB) Section 1071 rule, the CFPB stated that staff have been instructed to initiate new rulemaking to possibly replace or change the current rule. While I do not know yet what specific changes CFPB has planned for its new rulemaking, I am very pleased to have learned of this news as WBA has been vocal in our objections and concerns of Section 1071 since it was first proposed in the fall of 2021. In addition, last week the House Financial Services Committee voted on April 2 to approve H.R. 976, which would repeal Section 1071 in its entirety.

The Dodd-Frank Act directed CFPB to adopt a regulation to require banks to collect certain lending data from small businesses. This provision of the Act, Section 1071, was first implemented in March 2023 through amendments to Regulation B which implements the Equal Credit Opportunity Act (ECOA). The original effective date of the 2023 final rule was August 29, 2023, with rolling mandatory compliance dates ranging from October 1, 2024, to January 1, 2026, based upon loan origination activity.

Due to litigation by lenders challenging the rule, the mandatory compliance dates for the Section 1071 rule were extended by CFPB on June 25, 2024, through the issuance of an interim final rule. In February, the Fifth Circuit granted a stay in the ongoing litigation which further tolled the compliance dates for financial institutions that are also members of the trade associations involved in the lawsuit.

In the past, when I have been asked by members whether the bank should work to implement the requirements of Section 1071 despite the ongoing litigation and our industry efforts to rollback or eliminate the rule, my recommendation has been for banks to continue their efforts to meet the revised mandatory compliance dates for the rule. However, given the change in the Administration, the litigation status, last week’s movement of repeal legislation and news of a new proposed Section 1071 rule, I believe banks should take a temporary pause pending the outcome in one or more of these actions.

The industry has challenged the Section 1071 rule on all fronts over the years – through legislation, regulation, and judicial action. While a new proposed rule is not yet published, WBA will advocate for the elimination of a requirement to collect any data beyond that expressly provided for under the Dodd-Frant Act. WBA will also advocate for CFPB to revise the definitions of “covered financial institutions” and “small business” to raise both thresholds within. WBA is also continuing its legislative advocacy this week while we are in Washington D.C. with a banker delegation as part of ABA’s Washington Summit for the full repeal of Section 1071, encouraging continued support of H.R. 976.

WBA will continue to keep members apprised of these various changes regarding Section 1071 as they occur. If you have any questions regarding Section 1071, be sure to reach out to WBA Legal at wbalegal@wisbank.com

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Executive Letter: CFPB Wins Section 1071 Case. Plaintiffs Plan to Appeal. WBA Continues to Fight!

By Rose Oswald Poels

Federal Judge Randy Crane made his decision last week in the much-anticipated case Texas Bankers Association v. CFPB, S.D. Tex., Docket No. 7:23-cd-00144, 8/26/24, that CFPB did not violate the Administration Procedure Act (APA) when it finalized the small business data collection rule (Section 1071) last March. Section 1071 requires banks that make at least 100 small business loans a year to collect and report certain data about the small business borrower, application information, and loan terms. In his decision, Judge Crane wrote: “It may well be that the Final Rule proves ill-advised as a policy matter, but that possibility does not itself make the Final Rule unlawful under the APA.”

I am certainly disappointed with the decision. WBA, and the industry as whole, continue to be gravely concerned over the cost of implementing the rule and most importantly of the privacy concerns of our small business community borrowers. It is expected that the plaintiffs will appeal the decision.

As a result of the decision, WBA will continue our efforts on the federal level to persuade our congressional delegation of necessary changes. Last summer WBA worked to encourage our Wisconsin congressional delegation to pass Congressional Review Act (CRA) resolutions in both the U.S. House and Senate to disapprove the Section 1071 rule. Under the CRA, if Congress enacts a joint resolution of disapproval, a rule promulgated by an agency does not take effect. Unfortunately, President Biden vetoed the joint resolution of disapproval, and the Senate fell short in its vote with the necessary two-thirds vote to overturn the veto. But our fight continues.

WBA also plans to once again communicate industry concerns directly with CFPB staff in our upcoming fall Washington, D.C. Regulatory Trip where myself, and a dozen Wisconsin bankers, will meet directly with CFPB and other federal banking agencies to express specific regulatory concerns and advocate against excessive regulatory burden.

While WBA continues to fight implementation of Section 1071, CFPB continues to work towards implementation. CFPB previously issued an interim final rule to extend mandatory compliance dates given the court case mentioned above and has recently opened a beta platform for Section 1071 data collection.

Being mindful of the possibility of having to implement a rule as robust as Section 1071, WBA has provided Section 1071 training in past WBA Compliance Forums and through past webinars. Past toolkit materials will be reposted shortly to the WBA Compliance Resources page given the recent court decision. Additionally, WBA will be hosting a Section 1071 workshop, Friday, October 18 in a hybrid format. To further assist with implementing the rule as cost effectively as possible, WBA will continue to create other educational Section 1071 resources.

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Executive Letter: Federal Judge in Texas Delays Section 1071 Mandatory Compliance Dates for Some

By Rose Oswald Poels

Through an order issued earlier this week, a federal judge in the U.S. District Court, Southern District of Texas, McCallen Division enjoined implementation and enforcement of the Bureau of Consumer Financial Protection’s (CFPB) Section 1071 Small Business Data Collection and Reporting Rule while the United States Supreme Court hears a challenge to CFPB’s funding structure. This enjoinment however does not apply to all banks.

The American Bankers Association (ABA), Texas Bankers Association (TBA), and Rio Bank of McAllen, Texas (collectively, the plaintiffs) had jointly filed a lawsuit against CFPB earlier this spring seeking an injunction for all lenders covered by the rule. The plaintiffs requested the court enjoin the Section 1071 rule nationwide until the U.S. Supreme Court resolves the constitutionality of CPFB’s funding structure.

In 2022, the Fifth Circuit held CFPB’s funding structure unconstitutional because Congress funded CFPB directly from the Federal Reserve; such funding contradicts the Constitution’s Appropriations Clause. CFPB appealed the Fifth Circuit’s decision. See CFPB v. Community Financial Services Association of America. The U.S. Supreme Court agreed to take up the case; however, the Supreme Court is not scheduled to hear arguments until October. A decision by the Supreme Court could be released any time before the end of June 2024. These dates are very close to mandatory implementation of the Section 1071 rule — which for some banks begins as soon as October 2024.

As mentioned above, the federal Texas judge enjoined implementation and enforcement of CFPB’s Section 1071 rule. Unfortunately, however, the court denied the plaintiff’s request for nationwide injunctive relief. The order only applies to the plaintiffs’ members. As a result, the relief only applies to ABA members, TBA members, and to Rio Bank.

I am currently in discussion with outside counsel regarding the narrowness of the order and whether other steps may be taken to help find relief for WBA-member banks not covered by the order. I encourage banks that have yet to determine applicability of Section 1071 to the bank to determine whether and when it must comply with Section 1071, as applicable.

As a reminder, implementation of the Section 1071 rule is staggered. Banks that originate more than 2,500 covered credit transactions in each of the two preceding calendar years must comply with the rule no later than October 1, 2024; banks that originate less than 2,500 but at least 500 covered credit transactions in each of the two preceding calendar years must comply no later than April 1, 2025; and banks that originate less than 500 but at least 100 covered credit transactions in the previous two calendar years must implement by January 1, 2026.

A covered credit transaction is one that meets the definition of “business credit” under Regulation B unless the credit is specifically excluded by the Section 1071 rule. Agricultural purpose loans are included in the Regulation B definition. Specifically excluded credit from the definition of a covered credit transaction under Section 1071 are: trade credit, HMDA-reportable transactions, insurance premium financing, public utility credit, securities credit, incidental credit, factoring, and leases, as defined by the rule. The ability to exclude HMDA-reportable transactions from the definition of covered credit transaction applies to both HMDA-reporting and non-HMDA reporting banks.

Read the Order
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Executive Letter: Take Action: Advancing the Association’s Advocacy Initiatives

Rose Oswald PoelsBy Rose Oswald Poels

This April, nearly 200 bankers from throughout Wisconsin gathered in Madison to address their elected officials on topics impacting our industry and communities. As part of the Wisconsin Bankers Association’s (WBA) efforts to advocate and assist members in positively impacting their local communities, the Association annually hosts Capitol Day to provide bankers with the opportunity to establish relationships and share experiences with their legislators. This year’s record attendance not only underscores the dedication WBA-member bankers have for their industry but highlights the desire bankers have to get involved.

During this legislative session, WBA will be working to guard against harmful credit union expansion and credit card swipe fees (interchange) as well as pass legislation that will help prevent elder financial exploitation, provide greater tax fairness, and support banking modernization, among many other key issues. In addition to familiar faces, we were happy to see many first-time attendees at the 2023 Capitol Day. Now is the time to keep the momentum going; attending Capitol Day is just one of the many ways bankers in Wisconsin can get engaged to support the banking industry and the Association’s advocacy initiatives.

Lead 

First and foremost, all banks should ensure that they have named an Advocacy Officer. As an Advocacy Officer, WBA members help coordinate regulatory, legislative, and community advocacy efforts in their bank, and beyond. This volunteer position serves as the point person between the WBA Advocacy Team and your bank. The Advocacy Officer shares key updates and opportunities to ensure your bank is up to speed on issues impacting your institution and your community.

In addition, your bank’s Advocacy Officer can help coordinate, in conjunction with WBA staff, Take Your Legislator to Work Days — an outreach program that provides lawmakers with the opportunity to learn more about the state’s banking industry by visiting a community bank. In addition, your bank’s Advocacy Officer can help coordinate or participate in trips to the State Capitol, Washington, D.C., and in-district offices to meet with state and federal elected officials and regulators.

Fundraise 

As we look ahead to the 2024 Election, engagement in all areas of the Association’s advocacy infrastructure is critical. Of course, active participation in events that help connect bankers with their elected officials is important. However, in order to proactively support the pro-banking legislators and candidates who stand behind our industry, fundraising continues to be one of the most significant components in our role as advocates.

While donations of any amount to Wisbankpac, Alliance for Bankers Conduit (ABW), and the Association’s issue advocacy fund greatly impact the work we do on the industry’s behalf, I encourage bankers to consider joining WBA’s Silver Triangle Club, Gold Triangle Club, Leadership Circle, and/or the Hall of Fame.

  • Silver Triangle: Minimum personal donation of $1,000 by an individual banker.
  • Leadership Circle: Minimum personal donation of $3,000 by an individual banker.
  • Hall of Fame: Minimum aggregate lifetime personal donations of $25,000 by an individual banker.
  • Gold Triangle: Aggregate personal donation, based on bank-asset size, from officers, directors, and employees.

These efforts to unify the voices of bankers in Wisconsin and shape our industry for the betterment of our communities are impossible to do alone. Annually, WBA also recognizes the individual banks that go above and beyond in their overall advocacy efforts with the BIGG (Bankers Involved with Grassroots and Government) Award.

With such an impressive turnout at this year’s Capitol Day, I look forward to seeing the energy and enthusiasm continue to take WBA’s advocacy efforts to new levels.

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Executive Letter: Ask Your Member of Congress to Stop CFPB’s Section 1071 Rule From Taking Effect

Rose Oswald PoelsBy Rose Oswald Poels

As I have previously reported, the Bureau of Consumer Financial Protection (CFPB) released its final rule, which will require nearly all of Wisconsin’s banks to collect and report data regarding their small business customers who seek credit.

CFPB’s Section 1071 rule will require banks who make at least 100 business loans in each of the two preceding calendar years to collect and report 21 data points for each credit requested by businesses that have $5 million or less in gross annual review.

Despite several Wisconsin bankers, and myself, speaking directly with Director Chopra regarding our grave concerns of the negative impact an overly broad rule will have — including concerns of data privacy for small business customers — CFPB finalized a rule, which largely disregarded our concerns.

I urge you to share this information among staff and ACT NOW to ask your member of Congress to support Joint Resolution H.J. 50 to express disapproval of CFPB’s final rule and ask that such a rule should have no force or effect. You may use the ABA or ICBA action tools below to make such request.

ABA’s Take Action Tool ICBA’s Take Action Tool
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April 2023 Compliance Journal

The April 2023 WBA Compliance Journal is now available. In this edition, readers will find an article summarizing key components of the final Section 1071 rule. Readers will also find summaries of recently published agency rules and notices, and other important compliance-related updates for bankers.
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Executive Letter: CFPB Releases Final Section 1071 Business Data Collection Rule

Rose Oswald PoelsBy Rose Oswald Poels

Last Thursday, the Bureau of Consumer Financial Protection (CFPB) issued its long-awaited final Section 1071 business data collection rule. The Wisconsin Bankers Association (WBA) has been engaged in the rulemaking process since the proposal’s inception. While I know the general requirements for this rule came directly from the Dodd-Frank Act, CFPB chose to add in many more data points than what the law required which have made this rule very burdensome for the banking industry and intrusive for banks’ small business customers.

Just this past fall, I, along with several Wisconsin bankers, shared specific concerns of the proposal directly with CFPB Director Rohit Chopra. I am disappointed our concerns were largely disregarded given the requirements within the final rule. Our concerns of data privacy for small business customers remain.

Given the low threshold for rule applicability, the amount of data to be collected and reported, and the changes in process that will need be implemented, the rule will be burdensome to implement. While I and the WBA Legal team are currently working through the final rule and accompanying resources, below are highlights of the final Section 1071 rule. WBA will certainly be hosting educational events and will be creating resources around the final rule in the forthcoming months.

Highlights

  • The final rule applies to banks that originated at least 100 covered originations in both of the two previous years.
  • “Small business” means one with gross revenue of $5 million or less in the preceding fiscal year.
  • Small businesses will be able to self-identify as women-, minority-, or LGBTQI+ owned.
  • Lenders will be able to rely on financial and other information provided by the small business applicant.
  • Mandatory compliance dates are staggered based upon the number of covered originations made by each bank, in particular:
    • A bank must begin collecting data and otherwise complying with the final rule on October 1, 2024, if it originated at least 2,500 covered originations in both 2022 and 2023.
    • A bank must begin collecting data and otherwise complying with the final rule on April 1, 2025, if it:
      • Originated at least 500 covered originations in both 2022 and 2023;
      • Did not originate 2,500 or more covered originations in both 2022 and 2023; and
      • Originated at least 100 covered originations in 2024.
  • A bank must begin collecting data and otherwise complying with the final rule on January 1, 2026, if it originated at least 100 covered originations in both 2024 and 2025.

As mentioned above, the CFPB has created resources which accompany the final rule. The resources include an executive summary, quick reference guides, and a data point chart.

View the Final Rule and Related CFPB Resources
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