The U.S. District Court for the Southern District of Texas issued a nationwide injunction delaying implementation of Section 1071 of the Dodd-Frank Act for all covered financial institutions on Thursday. This action is in direct response to the efforts of the Equipment Leasing and Finance Association and the other parties that intervened in the case in recent months. Functionally, this means that the deadlines for compliance with Section 1071 are delayed by approximately 10 months for all ELFA member companies.
“This is a big win for ELFA members and the equipment finance industry as a whole,” Ralph Petta, president and CEO of the ELFA, said. “We applaud the action taken by the court today, which underscores the value of our association’s ongoing efforts to ensure Section 1071 doesn’t make it more burdensome for our members and their customers in the $1 trillion equipment finance industry to do business together.”
Earlier this year, the court issued a partial injunction in response to litigation filed by Rio Bank, the Texas Bankers Association and the American Bankers Association. That initial injunction had, until that point, only covered those three entities. In August, the ELFA intervened in the lawsuit to ensure that the initial relief provided by the judge would apply equally to all ELFA members.
The action taken by the court broadens the injunction to delay implementation of Section 1071 for all financial institutions covered by the rule. The delay will last until the Supreme Court issues a decision in a different but related case. The Supreme Court decision is expected in the spring or summer of next year. This means that compliance will likely now be pushed out approximately 10 months from all the dates published in the original rule.
Section 1071 is a part of the Dodd-Frank Act, which, when implemented by the Consumer Financial Protection Bureau, will require commercial finance companies to collect information about credit applicants, along with financial data associated with the application’s disposition, including pricing information, and report it to the CFPB on an annual basis.
