In a major victory for members of the Equipment Leasing and Finance Association and the entire equipment finance industry, the U.S. District Court for the Southern District of Texas issued a nationwide injunction delaying implementation of Section 1071 for all covered financial institutions. This action is in direct response to the efforts of ELFA 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.
In response to the Court Order, ELFA President and CEO Ralph Petta said, “This is a big win for ELFA members and the equipment finance industry as a whole. 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 had 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 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 today 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/summer timeframe of 2024. This means that compliance will likely now be pushed out approximately 10 months from all the dates published in the original rule.
ELFA has been working for over a decade to improve Section 1071. The association has been proactively engaged in both the legislative and regulatory arenas to defend its members’ interests and reduce the measure’s onerous reporting regulations. Section 1071 is a part of the Dodd-Frank Act, which when implemented by the Consumer Financial Protection Bureau (CFPB) will require commercial finance companies to collect information about credit applicants and report it to the CFPB on an annual basis, along with extensive financial data associated with the application’s disposition, including extensive pricing information.
The “Order Granting Intervenors’ Motions for Preliminary Injunction” is available on the ELFA website at https://www.elfaonline.org/1071. ELFA will be sharing more information with its members in the coming days and weeks about the implications of this ruling.