CFPB Finalizes Rule to Scale Back ECOA Protections

Welcome to Goodwin’s Financial Services News Roundup. Our newsletter highlights important legal, regulatory, and business developments related to financial services and banking.

0CFPB Finalizes Rule to Scale Back ECOA Protections

On April 22, the Consumer Financial Protection Bureau (CFPB) issued a final rule amending Regulation B, which implements the Equal Credit Opportunity Act (ECOA), to revise provisions related to disparate impact, discouragement of applicants or prospective applicants, and special purpose credit programs (SPCPs). The final rule provides that ECOA does not authorize disparate-impact liability, narrows the scope of prohibited discouragement to statements that a creditor knows or should know would indicate a discriminatory denial or less favorable terms, and imposes new limitations and conditions on SPCPs, including prohibiting for-profit programs from using race, color, national origin, or sex as eligibility criteria. The final rule takes effect July 21.

0CFPB Extends Small Business Lending Rule Filing Deadlines

On May 1, the Consumer Financial Protection Bureau (CFPB) issued a final rule extending the filing deadlines in the small business lending rule under Regulation B, which implements the Equal Credit Opportunity Act. The deadlines were previously extended in the CFPB’s June 2025 interim final rule. The small business lending rule requires covered financial institutions to collect and report data on credit applications for women-owned, minority-owned, and small businesses. The final rule does not change the existing tiered compliance dates for data collection, which remain in effect. Citing ongoing litigation and related uncertainty, the potential for further revisions to core aspects of the rule (including coverage, definitions, and data points), and the need to allow institutions additional time after beginning data collection to test systems, validate data, and implement appropriate governance and quality controls, the CFPB has again extended the timing of first filing obligations. Accordingly, first filings are expected on June 1, 2027, for the highest-volume lenders and June 1, 2028, for moderate- and lower-volume lenders. The CFPB also reiterated that it is considering additional revisions to the rule’s scope and data requirements. This final rule takes effect on June 30, 2026.

0Federal Banking Agencies Finalize Revisions to Community Bank Leverage Ratio

On April 23, the Federal Deposit Insurance Corporation (FDIC), Office of the Comptroller of the Currency (OCC), and Board of Governors of the Federal Reserve System (Federal Reserve) (collectively, the Agencies) finalized a rule revising the Community Bank Leverage Ratio (CBLR) framework. The final rule lowers the CLBR requirement from 9% to 8% for qualifying community banking organizations that elect to use the CBLR framework. The final rule also generally extends the grace period for returning to compliance with the CBLR for certain institutions that fall below the threshold from two consecutive quarters to four consecutive quarters. The final rule takes effect July 1.

0OCC Issues Interim Final Actions on Interchange Fees and Federal Preemption

On April 24, the OCC issued an interim final rule reaffirming national banks’ authority to charge non-interest fees and clarifying that, under the National Bank Act and 12 CFR 7.4002, national banks and federal savings associations may assess and receive non-interest charges and fees — including interchange fees — regardless of whether such fees are set by the bank or a third party. The rule expressly addresses recent uncertainty created by a federal district court decision in Illinois and reinforces longstanding interpretations that banks have broad authority to engage in payment processing and receive compensation for such services.

In a parallel interim final order, the OCC determined that federal law preempts the Illinois Interchange Fee Prohibition Act (IFPA), which would otherwise restrict interchange fees on portions of transactions (e.g., taxes and gratuities) and limit the use of transaction data, such that national banks and federal savings associations are not subject to the IFPA’s restrictions. The order underscores the breadth of federally authorized bank powers in card-based payment activities and third-party arrangements and reflects the OCC’s focus on preemption and regulatory clarity in response to state-level challenges.

Comments must be received on or before May 29, and both actions take effect June 30.

0Federal Banking Agencies Issue Revised Interagency Guidance on Model Risk Management

On April 17, the FDIC, OCC, and Federal Reserve, (collectively, the Agencies) issued revised model risk management (MRM) guidance, replacing prior supervisory frameworks and rescinding related guidance issued from 2011 to 2021. The revised guidance adopts a principles-based and risk-focused approach that emphasizes that MRM should be proportionate to a bank’s size, complexity, and model risk profile. The revised guidance discusses how to analyze model risks. The guidance is nonbinding and less prescriptive than prior issuances, affording banks greater flexibility in governance, validation, and controls while maintaining certain supervisory expectations around effective MRM.

0OCC Proposes Deregulatory Changes

On April 24, the OCC issued a notice of proposed rulemaking seeking to rescind or amend various regulations, pursuant to Executive Order 14219 (Ensuring Lawful Governance and Implementing the President's “Department of Government Efficiency” Deregulatory Initiative), which directs federal agencies to eliminate rules lacking clear statutory authority or addressing matters of social, political, or economic significance without express authorization. Under 12 CFR Part 24 (Community Development Corporation and Project Investments and Other Public Welfare Investments), the OCC proposes removing references to minority- and women-owned entities from examples of qualifying investments to align the regulation with the enabling statute’s text while continuing to permit national banks to make investments benefiting low- and moderate-income individuals and areas. The OCC also seeks to eliminate the lead arranger alternative compliance option for open market collateralized loan obligations under 12 CFR Part 43 (Risk Retention for Open Market Collateralized Loan Obligations), citing it as “irrelevant” following the 2018 court decision in Loan Syndications & Trading Ass'n v. SEC. Finally, the OCC proposes rescinding the nondiscrimination regulations in 12 CFR Part 128 for federal savings associations on the basis that they lack clear statutory authority and are duplicative of existing federal laws, including the Equal Credit Opportunity Act and Fair Housing Act. Comments must be received by May 27.

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