In a significant regulatory shift, a federal court ruling in early February 2025 placed a temporary hold on Section 1071 of the Dodd-Frank Act, a rule that would require small business lenders to collect and report demographic data on loan applicants. The decision follows months of legal battles led by financial institutions and trade groups, who argue that the rule imposes an excessive compliance burden with little benefit.

Complicating the matter further, the Consumer Financial Protection Bureau (CFPB)—the agency tasked with enforcing the rule—has been thrown into turmoil. The CFPB headquarters was temporarily shut down in late January as the Department of Justice (DOJ) initiated an investigation into the agency’s handling of regulatory enforcement and internal governance. This development has raised broader questions about the future of aggressive financial regulations enacted under the previous administration.