CFPB Faces Challenges in Collecting Data on Small Business Loans

The Consumer Financial Protection Bureau (CFPB) released a statement in May requesting information about the collection of data on small business loans. The Bureau’s request states that the Equal Credit Opportunity Act (part of the Dodd-Frank Act) has been amended to “require financial institutions to compile, maintain, and report information concerning credit applications made by women-owned, minority-owned, and small businesses” and that the Bureau “seeks to learn more about the small business financing market, including understanding more about the products that are offered to small businesses… as well as the financial institutions that offer such credit.”

The CFPB has also requested public comment regarding possible complications in reporting this data, both in terms of how data is collected and what difficulties they may cause to financial institutions.

The Independent Community Bankers Association immediately opposed the mandate. In an official statement by the ICBA, the President and CEO Camden R. Fine said, “The CFPB’s data collection and reporting mandates will compound existing regulatory and paperwork burdens, to the detriment of economic and job growth.”

Furthermore, the statement claimed that the regulations would “disproportionately harm community banks with little benefit” and that the “ICBA also strongly urges the CFPB to use its authority under the Dodd-Frank Act to exempt community banks from any reporting rules it issues and to limit mandatory data points to those required by statute.”

Reporting on small business loans is inherently more complicated than reporting on something more uniform like mortgage loans, as every small business loan is different. While the regulations are intended to combat discrimination, it could be difficult to compile enough data for small banks, which only make up 8 percent of the industry’s assets, to infer anything conclusive.

Sources:

Request for Information Regarding the Small Business Lending Market. (2017, May 10). Retrieved from https://www.consumerfinance.gov/policy-compliance/notice-opportunities-comment/open-notices/request-information-regarding-small-business-lending-market/

Mandelbaum, Robb. The CFPB Wants Data On Small Business Loans. Bankers Are Outraged. (2017, May 29). Retrieved from https://www.forbes.com/sites/robbmandelbaum/2017/05/29/the-cfpb-wants-data-on-small-business-loans-bankers-are-outraged/#53a84fcebc3f

ICBA Strongly Opposes CFPB Reporting Mandates. (2017, May 10). Retrieved from http://www.icba.org/news-events/press-releases/2017/05/10/icba-strongly-opposes-cfpb-reporting-mandates

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