The Consumer Financial Protection Bureau filed a motion yesterday asking a federal judge to pause a lawsuit challenging its open banking rule, as the agency plans to substantially revise the regulation through a new rulemaking process. The judge granted the stay request.
Why it matters: The CFPB’s move marks a dramatic shift in policy under the Trump administration’s new leadership and could reshape the future of open banking in the U.S. Financial institutions, fintechs, and data aggregators are watching closely, as the rule governs how consumer financial data can be accessed and shared.
The big picture:
- The CFPB adopted the current open banking rule in October 2024, requiring banks and credit unions to make consumer data available upon request to consumers and authorized third parties.
- The rule was meant to give consumers control over their financial data, but it was challenged on Day One by the Bank Policy Institute, the Kentucky Bankers Association, and Forcht Bank, who argued it exceeded the agency’s authority.
What they’re saying:
“In light of recent events in the marketplace, the Bureau has now decided to initiate a new rulemaking to reconsider the Rule with a view to substantially revising it and providing a robust justification,” the CFPB wrote in its motion. “The Bureau seeks to comprehensively reexamine this matter alongside stakeholders and the broader public … to come up with a well-reasoned approach that aligns with the policy preferences of new leadership.”
What’s next:
- The CFPB will issue an advanced notice of proposed rulemaking within three weeks to kick off the accelerated revision process.
- The agency committed to filing updates every 90 days during the stay.
- The Financial Technology Association (FTA), which had been allowed to intervene in the case, did not oppose the stay, while the bank plaintiffs objected and intend to continue pushing for the rule to be vacated.
