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CBA Statement On Section 1071 Final Rule: “Banks Ready to Get to Work”
Consumer Bankers Association (CBA) President and CEO Lindsey Johnson today released the following statement after the Consumer Financial Protection Bureau (CFPB) issued a final rule to implement Section 1071 of the Dodd-Frank Act.
“The nation’s leading banks proudly serve as financiers of the American Dream across every community they serve, helping to drive economic growth and opportunity for millions of small businesses. Banks fully support the mission of Section 1071 and have taken significant steps to expand access to credit for minority- and woman-owned businesses. Helping ensure Main Street job creators have the tools necessary to thrive amidst ongoing economic uncertainty is at the core to our industry’s mission.
“CBA long has urged policymakers to recognize the significant time and resources necessary for banks to meet new regulatory expectations and deliver on the intent of Section 1071 in the market, and we’re concerned the final implementation timeline is insufficient for such a massive undertaking. As such, CBA will continue urging the Bureau to extend the timeline.
“Additionally, while we are encouraged the Bureau applied new data collection requirements equally across the financial services ecosystem – including to fintechs and other non-banks that lend to small businesses without federal oversight – the $5 million threshold will complicate the collection process by capturing data from businesses that are not traditionally considered to be small and will not reflect the intended purpose of 1071.
“Over the next 18 months, we will be focused on working with members and the Bureau to ensure the successful implementation of this important rule. As a part of that effort, CBA renews its call for the Bureau to establish an industry task force to help update the agency on banks’ progress and identify issues that must be addressed. Our members have their sleeves rolled up and are ready to get to work.”
Director Chopra on Section 1071 at CBA LIVE
During a fireside chat with Johnson on day two of CBA LIVE, March 28, 2023, ahead of the imminent release of the Section 1071 final rule, CFPB Director Rohit Chopra endorsed a phased approach towards implementation while also welcoming increased collaboration with industry during this process – an idea CBA advocated for in a letter sent to the agency last month:
“We are trying to do our part to make sure that we’re thinking about phasing implementation. We ourselves have to ingest data from many, many lenders across the country. So, I think you will see it happen in phases. […] We’re also looking at ways to work directly with technology developers and frankly, the industry. The more it is working through consortia and others to find solutions to implement this that will help, we will work with any of them.”
To read more comments from Director Chopra at CBA LIVE, click HERE.
More recently, in anticipation of the final Section 1071 Rule, CBA called on the Bureau to create an industry-wide task force. Because Section 1071 implementation will require the development of entirely new systems, it will be critical for the CFPB to work collaboratively with the industry to ensure the goals of protecting and expanding access to credit for small businesses and underserved communities come to fruition.