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# Federal Judge Blocks CFPB’s Small Business Lending Rule Amid Funding Questions

A federal judge in Texas has issued an injunction preventing the Consumer Financial Protection Bureau (CFPB) from enforcing a new rule that requires lenders to collect demographic data from small-business borrowers. The injunction comes as the constitutionality of the agency’s funding mechanism remains in question.

## Judge’s Ruling and Implications

Judge Randy Crane of the US District Court for the Southern District of Texas issued the injunction on Monday, specifically barring the CFPB from enforcing the small business lending rule against Rio Bank of McAllen, Texas, as well as members of the Texas Bankers Association and American Bankers Association (ABA). The injunction will remain in effect until the US Supreme Court makes a ruling on the constitutionality of the CFPB’s funding.

The US Supreme Court is set to hear oral arguments in October regarding the CFPB’s appeal of a ruling from the US Court of Appeals for the Fifth Circuit. Last year, the Fifth Circuit found that the CFPB’s funding through the Federal Reserve violates the Constitution’s appropriations clause. A ruling from the Supreme Court is not expected until the summer of 2024.

While the injunction only applies to the Texas Bankers Association’s 400 members, including Rio Bank, and the ABA’s members nationwide, which collectively hold $19.2 trillion in deposits, it raises significant questions about the CFPB’s ability to enforce the small business lending rule.

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