A federal judge in Texas has expanded the stay against the Consumer Financial Protection Bureau’s plan to enforce a rule designed to combat gender and racial discrimination in small business lending to cover all financial institutions impacted by the rule. The judge had initially issued a preliminary injunction back in August the applied only to the plaintiffs in the case — members of the Texas Bankers Association and the American Bankers Association.
The rule, which was finalized by the CFPB in March, mandated banks to gather data on loan applications from women-owned, minority-owned, and small businesses to help lenders identify business development needs and opportunities. However, the Texas Bankers Association, Rio Bank, and the American Bankers Association had challenged the rule, arguing that the costs of compliance, estimated at $100,000 per community bank, would cause irreparable harm.
After the August ruling, a number of parties — the Community Bankers of America, Independent Bankers Association of Texas, Texas First Bank, Credit Union National Association, Cornerstone Credit Union League, Rally Credit Union, Axle Funding, and Equipment Leasing and Finance Association — all jumped in and asked to be included in the ruling.
“To judicially exempt the parties to this case, but not others, from the Bureau’s final rule both undermines the statute — what Defendants want to avoid — and leaves non-exempted lenders subject to the discretion of an agency whose very ability to act is a matter of constitutional concern pending resolution on a nationwide scale,” wrote Chief Judge Randy Crane of the District Court for the Southern District of Texas. “To limit the injunction would be to undermine the goals of preventing inequality in lending and harm to the constitutional structure pending U.S. Supreme Court review of the question at issue.”
