Position
- As relationship bankers, community banks look at each small-business loan individually and often in customized terms based on many factors.
- The CFPB’s rigid data collection requirements will hamper the ability of community banks to tailor loans to meet the unique needs of local businesses.
- Not only will these data reporting requirements place a significant compliance burden on small community banks, but this final rule does not address the significant concerns ICBA has raised about the privacy of applicants, particularly in smaller
communities.
- The CFPB’s rule will make it possible for loan applicants to be identified, especially in rural areas — potentially driving small-business owners away from community banks and local communities while having a chilling effect on small-business
lending.
- The CFPB should use its authority to exempt more community banks and small businesses from its rule and limit mandatory data points to those required by statute. Restricting access to credit in local communities during this critical economic period
will ultimately harm the borrowers the CFPB is trying to help — women-owned, minority-owned, and small businesses.
Background
The CFPB finalized a rule for the collection and reporting of data on financial institutions’ small business lending under the Equal Credit Opportunity Act. This includes the collection of data that will be used to facilitate enforcement of fair lending laws.
While the governing statute requires the collection and reporting of 13 pieces of data, the CFPB is using its discretionary authority granted by statute to collecting an additional 8 categories of data, which comprise more than 80 datapoints and sub-data.
Responding to motions filed by ICBA, IBAT, and Texas First Bank, the U.S. District Court has issued temporary injunctive relief from the CFPB’s Section 1071 final rule to all community banks across the country, staying the effective date past the ones set out in the final rule.
