As the days get a little shorter and “back to school” season kicks into high gear, many of us are squeezing in those last summer adventures while juggling a growing list of fall priorities. This month, we’re unpacking the latest legal developments you may have missed while juggling the end of summer break, back to school, and that growing list of priorities. Here’s a concise overview of federal actions and regulatory signals from August 2025 that could impact your business.
CFPB updates: funding cap reduction, limitation of supervisory authority, and implications for the alternative commercial finance industry
It has been two months since the One Big Beautiful Bill Act (OBBBA) became law, and while we are still working to unpack its full potential impact on the commercial financing industry, one change may have a more immediate effect. Section 30001 of the OBBBA amends the Dodd-Frank Act reducing the Consumer Financial Protection Bureau (CFPB) funding cap from a maximum allowable funding of 12% of the Federal Reserve System’s inflation-adjusted total operating expenses in 2009 to 6.5%. To put this into context, the CFPB’s 2023 funding cap was $750.9 million. However, under the new funding cap, the CFPB would have been limited to operating on a budget of $406.9 million in fiscal year 2023.
With this significantly reduced budget, it also should come as no surprise that the CFPB, on August 26, 2025, issued a proposed rule that would clarify when the CFPB may exercise its authority to supervise a nonbank. The CFPB aims to establish a clear, consistent standard for determining when nonbank financial institutions can be designated for CFPB supervision due to posing “risks to consumers” in the offering or provision of consumer financial products or services. Currently, the CFPB makes such determinations on a case-by-case basis, which can lead to inconsistency and uncertainty for regulated entities. The proposed rule defines “risks to consumers” as conduct that presents a high likelihood of significant harm and is directly connected to the offering or provision of a consumer financial product or service. The CFPB believes this approach better aligns with congressional intent and will provide greater clarity for institutions, while also focusing the bureau’s supervisory resources on serious consumer harms rather than speculative or minor issues. The proposed rule is open for public comment until September 25, 2025, and the CFPB invites feedback on all aspects of the standard, including whether “risks to consumers” should be limited to potential violations of law. If finalized, the rule would take effect 30 days after publication, or 60 days if deemed a “major rule” under the Congressional Review Act.
Takeaways
The CFPB’s significantly reduced budget and its proposed rule suggest the bureau is unlikely to pursue expansion of its jurisdictional oversight into new areas, such as alternative commercial finance. Moreover, these deregulatory trends at the federal level indicate that the industry will likely continue to navigate a patchwork of state disclosure requirements for the near future. Accordingly, it is essential for the alternative commercial finance industry to closely monitor state regulatory developments and proactively engage with state regulators whenever new disclosure laws are proposed.
FDIC guidance on customer identification program requirements
On August 5, 2025, the Federal Deposit Insurance Corporation (FDIC) issued new guidance clarifying that FDIC-supervised financial institutions may use pre-populated customer information to satisfy customer identification program (CIP) requirements when opening accounts. Under this updated supervisory approach, collecting identifying information “from the customer” does not exclude the use of pre-filled data, such as information from current or prior relationships, affiliates, vendors, or third parties, so long as customers have the opportunity to review, correct, update, and confirm the accuracy of the information before submission. The FDIC will consider such pre-filled information as being “from the customer” for CIP purposes, provided the institution’s account opening process enables a reasonable belief in the customer’s identity and is based on a risk assessment that addresses potential fraud.
This interpretation supports streamlined digital onboarding, which is especially important for those partnering with banks to offer alternative commercial finance solutions.
Executive Order 14331: guaranteeing fair banking for all Americans
On August 7, 2025, President Trump issued an executive order aimed at preventing financial institutions from denying or restricting access to financial services based on customers’ political or religious beliefs or lawful business activities. The order responds to concerns about “politicized or unlawful debanking,” which it defines as “an act by a bank, savings association, credit union, or other financial services provider to directly or indirectly adversely restrict access to, or adversely modify the conditions of, accounts, loans, or other banking products or financial services of any customer or potential customer on the basis of the customer’s or potential customer’s political or religious beliefs, or on the basis of the customer’s or potential customer’s lawful business activities that the financial service provider disagrees with or disfavors for political reasons.” The order directs federal banking regulators to remove the use of “reputation risk” and similar concepts from their guidance and examination materials if they could lead to politicized or unlawful debanking. Regulators must review and amend any related regulations, reinstate clients who were denied services on impermissible grounds, and consider disciplinary action against institutions found to have engaged in such practices. The Secretary of the Treasury is also tasked with developing a broader strategy to eliminate politicized debanking.
Takeaways
This executive order has several key implications. First, banks will face increased scrutiny regarding any decisions to terminate or restrict relationships. Further, alternative commercial finance companies that enter into bank partnerships must also ensure their own practices and client screening processes align with the new regulatory expectations, as banks may require assurances that their partners are not engaging in activities that could trigger compliance issues under the revised standards. Ultimately, the order increases the importance of clear documentation and transparency regarding business decisions to not offer financing to potential clients to avoid any perception of risk unrelated to objective, risk-based criteria.
Critical insights from Husch Blackwell
Contact us
If you have any questions about how these developments impact your business or need help evaluating your compliance strategy, please contact the Husch Blackwell Alternative Commercial Finance team.
This newsletter is for informational purposes only and does not constitute legal advice. For guidance tailored to your specific situation, please consult your Husch Blackwell attorney.