In today’s ever-evolving regulatory landscape, staying informed about the latest developments is crucial for lenders. In this blog, we provide an update on the current status of ongoing legal challenges surrounding Dodd-Frank Section 1071 and federal Community Reinvestment Act (“CRA”) regulations.
Dodd-Frank Section 1071
Oral argument is scheduled for February 3, 2025 in the U.S. Court of Appeals for the Fifth Circuit Court of Appeals in the Texas Bankers Association v. Consumer Financial Protection Bureau (CFPB) case. The most recent action taken on this case was that on August 26, 2024, the U.S. District Court for the Southern District of Texas granted a “summary judgment” in favor of the CFPB and declared that the CFPB did not exceed the rulemaking authority granted to it under Dodd-Frank Section 1071. As of today, the largest reporters, deemed “tier 1 institutions”, have compliance dates on July 18, 2025, with a first filing deadline of June 1, 2026. Smaller filers have compliance dates and filing deadlines which are later than those dates. The final rule implementing Dodd-Frank Section 1071 was published by the CFPB in the Federal Register on May 31, 2023.
CRA regulations
The final rule which revised the federal regulations that implement the CRA was published in the Federal Register on February 1, 2024 with an effective date of April 1, 2024. The authors were the OCC, Federal Reserve, and FDIC. On March 29, 2024, the District Court for the Northern District of Texas granted a motion by several trade associations for a preliminary injunction on the rules. The court in Texas Bankers Association, et al. v. Office of the Comptroller, et al. “enjoined” (i.e., prevented) the federal banking agencies from enforcing the Final Rule in its entirety against the plaintiffs, extending the effective date of April 1, 2024, as well as all other implementation dates, by one day for each day that this injunction remains in place. In the meantime, the existing CRA regulations (i.e., the CRA regulations that were in place prior to February 1, 2024) are to remain in effect for the plaintiffs. The plaintiffs in the case include the Texas Bankers Association and Independent Community Bankers of America. On July 18, 2024, federal banking regulators asked the Fifth Circuit Court of Appeals to lift the Texas court injunction. As of today, it is not clear how the court will rule.
In addition, on March 21, 2024, the three federal agencies published a supplemental rule that pushed back the effective date of the facility-based assessment areas and public file requirements from April 1, 2024, to January 1, 2026.
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