Compliance Journal September 2024
Special Focus Texas Court Decision Sides with CFPB on Section 1071 Rule Late last month, Federal Judge Randy Crane issued a decision in 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.” WBA is certainly disappointed with the decision. WBA, and the industry as a whole, continue to be gravely concerned over the cost of implementing the rule and most importantly of the privacy concerns of small business community borrowers. It is expected that the plaintiffs will appeal the decision. At this point, CFPB continues to work towards implementation of the Section 1071 rule having issued an interim final rule to extend mandatory compliance dates given the court case mentioned above and recently opening 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 educational Section 1071 resources. The decision may be viewed at: https://fingfx.thomsonreuters.com/gfx/legaldocs/byvrqwmawpe/08262024cfpb.pdf The CFPB interim final rule to extend mandatory compliance dates may be viewed at: https://www.govinfo.gov/content/pkg/FR-2024-07-03/pdf/2024-14396.pdf The CFPB beta platform for Section 1071 may be viewed at: Small Business Lending Data Submission Platform | Consumer Financial Protection Bureau (cfpb.gov) WBA Section 1071 Workshop Information: https://www.wisbank.com/events/wba-section-1071-workshop/
Retention of PPP Loan Records is Now 10 Years In an interim final rule published in the Federal Register on August 23, 2024, SBA announced it has lengthened the required records retention for lenders that made loans under the Paycheck Protection Program (PPP) to ten years from the date of final disposition of each individual PPP loan. The interim final rule was issued without advance notice or public comment. The rule is effective August 22, 2024.