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CBA Statement on New CFPB Rule Expanding Data Collection in The Small Business Lending Market
WASHINGTON – Consumer Bankers Association President and CEO Richard Hunt today released the following statement after the Consumer Financial Protection Bureau (CFPB) issued a Notice of Proposed Rulemaking (NPRM) for Section 1071 of the Dodd-Frank Act to expand data collection requirements for financial institutions in the small business lending market:
“For more than a century, CBA member banks have played an integral role as financiers of the American Dream for small businesses in every community they serve. Amidst the unprecedented economic effects of the COVID-19 pandemic, they administered more than 4 million PPP loans to support small businesses, worth more than $400 billion – over half the total dollar amount lent through the program – helping protect more than 90 million jobs. America’s leading banks remain steadfastly committed to the shared goal of increasing access to credit in underserved communities.
“As such, given the significant impact implementing regulations for Section 1071 will have on CBA member banks and other financial institutions, CBA looks forward to submitting its written comment on today’s proposed rule. The complexities of collecting and reporting credit application data on women-owned, minority-owned, and small businesses under Section 1071 cannot be overstated due to the nature of small business lending and the ways these applications are processed. Financial institutions and their vendors will also have to make significant changes to their systems and processes to meet new 1071 data collection and reporting requirements.
“As a result, it is imperative the CFPB carefully consider forthcoming written comments from CBA and other industry stakeholders to ensure the rule delivers on Section 1071’s intent without harming small business access to credit. Ultimately, a well-balanced final rule – with a phased approach to implementation and a thoughtfully tailored set of data points requiring collection – will limit the Bureau’s risk of creating unintentional impediments to small business credit access and empower banks to satisfy Section 1071’s goals. CBA stands ready and willing to assist in this effort.”
To read the CFPB’s Notice of Proposed Rulemaking for Section 1071 released today, click HERE.
In a December 2020 comment letter to former CFPB Director Kraninger regarding the pending rulemaking pursuant to Section 1071, CBA urged the Bureau to recognize the complex nature of data reporting in the small business lending market as it considers a potential timeline for implementation, stating:
“It is important that lenders have a significant amount of time to implement the new requirements once the regulations are final to determine what changes will be necessary in their procedures, forms, policies, and systems, and then to implement those changes. System modifications require not only time for development, but also for appropriate testing before being implemented.”
To read the full letter, click HERE.