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CBA Letter of Support for H.R. 4452, the Right to Lend Act of 2017
November 29, 2017
The Honorable Robert Pittenger
U.S. House of Representatives
224 Cannon House Office Building
Washington, D.C. 20515
Dear Representative Pittenger:
The Consumer Bankers Association (CBA) strongly supports H.R. 4452, the Right to Lend Act of 2017, which would amend the Equal Credit Opportunity Act to repeal the small business loan data collection requirement mandated by Section 1071 of the Dodd-Frank Act. CBA is the voice of the retail banking industry whose products and services provide access to credit to millions of consumers and small businesses. Our members operate in all 50 states, serve more than 150 million Americans and collectively hold two-thirds of the country’s total depository assets.
Section 1071 amends the Equal Credit Opportunity Act to require financial institutions to compile, maintain, and report information concerning credit applications made by women-owned, minority-owned, and small businesses. In order to implement this section, every financial institution must collect a wide array of data on any business, regardless of size, applying for credit. Banks must maintain a record of the information separate from the application, and report the information along with related information about the application (location of business, action taken, amount of credit provided, etc.) to the Consumer Financial Protection Bureau.
CBA members anticipate the complex new data collection requirements under Section 1071 could lead to a chilling of small business lending due to potential costly litigation from the misuse of collected information and burdensome compliance that would be imposed on small businesses and financial institutions of all sizes. Small business lending takes many forms and the comparison of this data will be infinitely more complex than data collection efforts undertaken on other lending products. It will be difficult to properly and fairly analyze the data and produce meaningful results. What is most troubling is the sensitive information collected will be made public on request in a manner to be established by regulation.
Financial intuitions must constantly calculate the risk profile of any lending product that is offered to a consumer or small business. The potential for costly litigation coupled with overly burdensome data collection requirements placed on the lender and the business could prove to be a negative for small business lending. Many institutions may choose to significantly limit their small business lending portfolios or eliminate from their balance sheets small business loans entirely due to risk exposure.
In order to prevent a reduction in small business lending, CBA supports H.R. 4452 to repeal Section 1071.
President and CEO
Consumer Bankers Association