ICBA to CFPB: Study Risks of Small-Business Data Collection

April 24, 2019


Washington, D.C. (April 24, 2019)—The Independent Community Bankers of America® (ICBA) called on the Consumer Financial Protection Bureau to identify potential benefits and burdens before rules are promulgated, including forthcoming rules on small-business data collection. In a letter to CFPB Director Kathleen Kraninger, ICBA reiterated its concerns with the negative impact of Section 1071 of the Dodd-Frank Act, which would commoditize small-business loans and disrupt lending.

“Imposing any new data collection and reporting requirements under Section 1071 on community bank small business lenders would negatively impact small business lending and lead to unfortunate, unintended consequences for small business owners seeking credit,” ICBA President and CEO Rebeca Romero Rainey wrote. “ICBA stresses the importance of thorough study and analysis before the issuance of a proposed rule that could disincentivize small business lending, thereby impairing small business access to credit.”

Section 1071 requires the CFPB to implement rules for the collection and reporting of data on financial institutions’ small-business lending. However, consumer protection law is inconsistent with the underlying nature of small-business loans, which are non-homogenous and unsuited for standardized recordkeeping or comparative analysis. The law will have a chilling effect on the ability of lenders to price for risk, unless the CFPB studies its potential risks and tailors the rule before adoption, ICBA wrote.

In today’s letter, ICBA encouraged the CFPB to study community banks’ smaller staff sizes, the cost of developing new databases and lending processes, the effect on “high-touch” relationship banking, and the risks to borrower privacy. The CFPB should seek the least disruptive rulemaking in implementing the 1071 provision and use upcoming forums to meet with community banks on this issue, ICBA wrote.

“After further exploration, ICBA is confident that the Bureau will recognize the inordinate burden that this rule would place on community banks and will use its authority under the Dodd-Frank Act to exempt community banks from data collection and reporting, limit any regulation to data points required by statute, and prioritize protecting customer privacy as it considers new data reporting requirements,” Romero Rainey wrote.

About ICBA

The Independent Community Bankers of America® creates and promotes an environment where community banks flourish. With more than 52,000 locations nationwide, community banks constitute 99 percent of all banks, employ more than 760,000 Americans and are the only physical banking presence in one in five U.S. counties. Holding more than $4.9 trillion in assets, $3.9 trillion in deposits, and $3.4 trillion in loans to consumers, small businesses and the agricultural community, community banks channel local deposits into the Main Streets and neighborhoods they serve, spurring job creation, fostering innovation and fueling their customers’ dreams in communities throughout America. For more information, visit ICBA’s website at www.icba.org

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