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Order Granting In-Part and Denying In-Part Plaintiffs' Motion for Preliminary Injunction

TEXAS BANKERS ASSOCIATION, et al., Plaintiffs,

VS. CONSUMER FINANCIAL PROTECTION
BUREAU, et al., Defendants.
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Now before the Court is Plaintiffs’ Motion for Preliminary Injunction filed by the three Plaintiffs—Texas Bankers Association, Rio Bank, McAllen, Texas, and American Bankers Association (collectively “Plaintiffs”). (Dkt. No. 13). This action arises in response to the “Small Business Lending Rule Under the Equal Opportunity Act (Regulation B)” (“the Final Rule”) issued by Defendant Consumer Financial Protection Bureau (“the Bureau”). See 88 Fed. Reg. 35,150 (May 31, 2023). The Final Rule requires covered financial institutions to collect and report to the Bureau data on applications for credit for small businesses. Id.

However, in 2022, the Fifth Circuit held that the Bureau’s funding structure is unconstitutional. See Cmty. Fin. Servs. Ass'n of Am., Ltd. v. CFPB, 51 F.4th 616, 623 (5th Cir. 2022), cert. granted, 215 L. Ed. 2d 104, 143 S. Ct. 978 (2023). That court did so because Congress funded the Bureau directly from the Federal Reserve, which is funding that contradicts the Constitution’s Appropriations Clause. Id. at 638-42. As a result, in Community Financial, the Fifth Circuit also held that a rule promulgated by the Bureau is invalid when it harms a plaintiff through its improper use of unappropriated funds to engage in rulemaking. Id. at 643. The Bureau appealed the Fifth Circuit’s decision. See CFPB v. Cmty. Fin. Servs. Ass'n of Am., Ltd., 215 L. Ed. 2d 104, 1 / 17 143 S. Ct. 978 (2023) (granting the Bureau’s petition for a writ of certiorari to the United States Court of Appeals for the Fifth Circuit).

Plaintiffs—a private bank and two trade associations—bring this action on behalf of themselves or their members. Plaintiffs challenge the Final Rule’s validity and ask the Court to enjoin it nationwide until the Supreme Court resolves the constitutionality of the Bureau’s funding structure in Community Financial. After considering the Motion, the Memorandum in Support of the Motion (Dkt. No. 13, Exh. 1), the responsive briefing (Dkt. No. 16), the reply (Dkt No. 17), and the relevant law, the Court is of the opinion that the Motion should be GRANTED IN-PART and DENIED IN-PART for the following reasons.

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