Last Week, This Morning

November 17, 2025

Below you will find several key developments in the financial services industry, including related developments in information privacy and data security, from the past week. We add an "Amicus Brief(ly)1" comment to each item, where we briefly (see what we did there?) note for friends (and again?) of CounselorLibrary the important takeaways from the developments outlined in the email. Our legal reporters - CARLAW, HouseLaw, InstallmentLaw, PrivacyLaw, and BizFinLaw - provide more comprehensive, real-time updates of federal and state laws, regulations, litigation, and other industry items of interest. For a personal guided tour and free trial of any of these legal reporters, please contact Michael Willer at 614-855-0505 or mwiller@counselorlibrary.com.

CFPB Anticipates Exhausting Its Available Funding by Early 2026

On November 11, in the first press release posted on its website since July, the Consumer Financial Protection Bureau announced that it filed a notice with the U.S. District Court for the District of Columbia in National Treasury Employees Union v. Vought. The NTEU, representing employees across multiple federal agencies and departments, including CFPB employees, sued acting CFPB Director Russell Vought in February 2025, challenging his efforts to dismantle the CFPB. The federal district court granted NTEU a preliminary injunction that prevented the CFPB from shutting down operations and terminating its employees, but, on appeal, the U.S. Court of Appeals for the D.C. Circuit vacated the injunction in August 2025.

The November 11 notice filed by the CFPB with the federal district court concerns the effect of a potential lapse in appropriations on the Bureau. According to the press release, the notice informs the court that "the Department of Justice's Office of Legal Counsel (OLC) has determined that the Bureau may not legally request funds at this time from the Federal Reserve under Dodd-Frank. OLC made this conclusion on the basis that the Federal Reserve System currently lacks any 'combined earnings' from which the Bureau may draw funding, as required by Dodd-Frank. OLC opinions are binding upon Executive Branch agencies including the Bureau. The Bureau anticipates having sufficient funds to continue operations until at least December 31, 2025." In the notice, the CFPB states that it "anticipates exhausting its currently available funds in early 2026."

The Dodd-Frank Act requires the CFPB to draw its funding from the "combined earnings of the Federal Reserve System." According to the OLC's opinion, "combined earnings" refers to the Federal Reserve's profits, and the Federal Reserve has operated at a loss since 2022. "If the Federal Reserve has no profits, it cannot transfer money to the CFPB."

Amicus Brief(ly): This administration has been tirelessly working the angles to make the CFPB go away. Realizing that Congress would have to act to terminate the CFPB because Congress created the CFPB by statute, leadership has turned to starving the Bureau of funding as a means to the end of dramatically reducing the impact of this regulator. It is not clear how this latest effort will shake out, but litigation over the staff layoffs continues, and we anticipate that the consumer advocates will not let this happen without resistance. To that end, the CFPB is hedging its bets by continuing to scale back Rohit Chopra-era rules, with some of those actions coming in the past week (see the balance of this week's newsletter, below). We'll follow and report on these developments, but the acting director and others in leadership at the CFPB have made their goals plain with respect to the future of this young regulator.

CFPB Proposes Dramatically Scaled-Back 1071 Small Business Data Collection Rule

On November 13, the Consumer Financial Protection Bureau published in the Federal Register a dramatically scaled-back 1071 small business data collection rule, kicking off a public comment period that ends on December 15, 2025. The 198-page proposed rule, signed by acting CFPB Director Russell Vought, excludes a wide range of products, including "merchant cash advances, small-dollar business credit and all agricultural lending," from reporting requirements. Additionally, financial institutions would have a longer time to comply with the rule, with new compliance deadlines set for January 1, 2028.

Legal challenges to the 1071 rule remain ongoing in three jurisdictions, including a lawsuit brought by the Revenue Based Finance Coalition in the U.S. District Court for the Southern District of Florida that challenges the prior characterization of so-called "MCAs" as credit. The CFPB's newest proposed 1071 rule carves out "MCAs," explaining that "MCAs are structured differently from traditional lending products; traditional lending concepts like 'interest rate' do not fit the way that MCAs are priced."

The CFPB also proposes excluding any business credit transaction in an amount of $1,000 or less, to be adjusted for inflation over time. In addition, the proposed rule reduces the gross annual revenue threshold for a "small business" from $5 million or less to $1 million or less. The CFPB explains that a $1 million threshold would help reduce regulatory burden on financial institutions.

Amicus Brief(ly): The small business data collection rule has been in the works for some time but is not out of the woods yet. This proposed rule pushes the compliance dates out far enough to allow the dust to try and settle on all of the lawsuits but also to allow companies time to prepare to comply with the rule if it survives all of the legal challenges. The CFPB is proposing to limit the impact of the rule considerably by having it apply to a smaller group of potential companies, measured both by volume of originations (100 originations per year becomes 1,000) and by company revenue ($5 million in gross annual revenue becomes $1 million), if the rule passes as proposed. No complaints from the industry on this one - these revisions will reduce the regulatory burden on the smaller group of companies subject to the rule.

Tenth Circuit Lifts Preliminary Injunction that Enjoined Colorado from Enforcing DIDMCA Opt-Out

On November 10, the U.S. Court of Appeals for the Tenth Circuit reversed a lower court injunction that enjoined Colorado from enforcing its opt out of Section 521 of the Depository Institutions Deregulation and Monetary Control Act of 1980. The DIDMCA, a federal law that permits state-chartered banks to export their interest rates into other states, allows states to "opt out" of such exportation. By opting out, a state could impose its own interest-rate cap, although it could only impose such a rate cap on loans "made in" the opting-out state.

In June 2023, the Colorado legislature passed House Bill 1229, which includes language that the interest and interest fee limitations function as an opt-out from Section 521 of the DIDMCA. In March 2024, three trade groups filed a complaint in Colorado federal court challenging Colorado's opt-out legislation. A federal district court granted the trade groups' motion for a preliminary injunction, which meant that Colorado was preliminarily enjoined from enforcing state-specific interest limitations against the members of the trade groups until the court determined the validity of the opt-out provision.

Colorado appealed and made three arguments against the injunction:

  • The DIDMCA does not have a cause of action that permits the filing of a lawsuit. (The Tenth Circuit rejected this argument.)
  • Colorado's opt-out for "loans made in such State" (the language used in the DIDMCA) includes loans in which the borrower is located in Colorado.
  • The district court incorrectly balanced the harms to the parties.

The Tenth Circuit held that "loans made in such State" refers to loans in which either the lender or the borrower is located in the opt-out state. Because Colorado opted out of Section 1831d of the DIDMCA, that statute no longer preempts Colorado's interest-rate cap for loans from out-of-state banks to Colorado borrowers. Therefore, the Tenth Circuit concluded that "(w)ithout Section 1831d's preemptive force, the rationale for the preliminary injunction falls apart. We have no basis under Section 1831d to enjoin [Colorado] from enforcing Colorado's interest-rate caps."

Amicus Brief(ly): This case is not over. The trade associations are almost certain to appeal this case to the U.S. Supreme Court, but it is not clear what legal theory will prevail there. On the one hand, DIDMCA did not limit the timeframe within which a state could opt out of Section 521. On the other hand, the question about whether a bank makes a loan "in" a state where it does not have a physical presence is thorny enough for the Supreme Court to want to settle it (see the arguments in the dissent, for example). This litigation is consequential for bank partnership lending models and for state-chartered banks trying to compete with national banks for consumer lending business. For now, as a result of this decision, Colorado can enforce its interest rate caps on bank lenders outside of Colorado making loans to Colorado residents. We will continue to watch with interest and will report if/when the appeal lands.

CFPB Requests Comment on Proposed Rule Amending Reg. B

On November 13, the Consumer Financial Protection Bureau requested public comment on a proposed rule that would amend certain provisions of Regulation B, which implements the Equal Credit Opportunity Act. Specifically, the proposed rule would amend provisions of Reg. B related to whether disparate impact claims are cognizable under the ECOA, under what circumstances a creditor may be deemed to be making a statement to an applicant or prospective applicant that would discourage, on a prohibited basis, a reasonable person from applying for credit, and under what conditions a creditor may offer special purpose credit programs.

The proposed rule would generally: (1) provide that the ECOA does not authorize disparate impact claims, delete language in Section 1002.6(a) of Reg. B indicating that disparate impact liability, referred to as the "effects test," may be applicable under the ECOA, and add language stating that the ECOA does not recognize the "effects test;" (2) amend Section 1002.4(b) of Reg. B's prohibition on discouraging applicants or prospective applicants from applying for credit to clarify that it prohibits statements of intent to discriminate in violation of the ECOA and is not triggered merely by negative consumer impressions and to clarify that encouraging statements by creditors directed at one group of consumers is not prohibited discouragement as to applicants or prospective applicants who were not the intended recipients of the statements; and (3) amend the standards for special purpose credit programs offered by for-profit organizations under Section 701(c)(3) of the ECOA to prevent unlawful discrimination.

Comments on the proposed rule must be received by December 15, 2025.

Amicus Brief(ly): With a relatively short comment window, companies can express their support for a regulation that specifically writes the "disparate impact" theory out of Reg. B. Faithful readers of these pages know that the prudential federal regulators have already removed the theory from their examination procedures. The pending proposal would take the step of formalizing a reading of ECOA that disavows the "effects test" in favor of more tangible proof of purposeful discrimination in credit. But remember that the pendulum has swung, and consumer advocates are entirely likely to challenge any final rule to this effect with the same vigor as that shown by industry advocates resisting the CFPB's more aggressive pro-consumer rules. With Loper-Bright having stripped agencies of the deference the Chevron case afforded them, the CFPB has no assurances that its rulemaking will "take." We anticipate a long road ahead for this proposal and any final rule that comes from it.

Texas OCCC Will Hold Webinar on Rulemaking Implementing Sales-Based Financing Law

The Texas Office of Consumer Credit Commissioner recently announced that it will hold an online webinar on November 19, 2025, at 2:00 p.m. central time to discuss plans for future rulemaking on commercial sales-based financing transactions to implement House Bill 700, which was enacted in June 2025. Registration for the webinar is available here.

H.B. 700 regulates sales-based financing transactions and requires providers and brokers of sales-based financing transactions to register with the OCCC. The law also bans sales-based financing providers from automatically debiting customer bank accounts in most circumstances. The law went into effect on September 1, 2025.

The OCCC provided an advance notice of the proposed rules, which includes a description of the anticipated proposed rules, a preliminary timeline, and questions for stakeholders. Of note, the OCCC anticipates that the rules will include a prohibition on unfair and misleading practices. Prohibited practices may include:

  • false, misleading, or inaccurate advertisements, solicitations, disclosures, or contract language;
  • a provider's or broker's failure to perform contracted-for services (or inaccurate descriptions of contracted-for services);
  • charging fees or other amounts that were not specifically disclosed and contracted for;
  • waivers of statutory rights;
  • foreclosing on collateral without complying with applicable requirements (e.g., Texas Business & Commerce Code, Chapter 9);
  • improperly characterizing a transaction as a "commercial" transaction when the advanced funds will be used for individual, family, or household purposes; and
  • a device or subterfuge to evade regulatory requirements.
Amicus Brief(ly): In the context of financial services regulation, more information is almost always better for regulated companies than less. It is early in the rulemaking cycle for this Texas regulation, so this webinar will not be a source of clarification on an actual rule. It should, however, provide some idea of the commissioner's thinking with respect to the forthcoming proposed rule. To that end, the OCCC's webinar this week is welcome news. Regulated sales-based financing companies should attend the webinar to get clarification from the OCCC with respect to the potential business prohibitions listed above.

1 For the unfamiliar, an “Amicus Brief” is a legal brief submitted by an amicus curiae (friend of the court) in a case where the person or organization (the “friend”) submitting the brief is not a party to the case, but is allowed by the court to file the brief to share information or expertise that bears on the issues in the case.