On September 15, 2020, the Consumer Financial Protection Bureau (“CFPB” or “Bureau”) released an Outline of Proposals under Consideration and Alternatives Considered for the small business data collection rulemaking mandated by Section 1071 of the Dodd-Frank Act and a High-Level Summary of the outline of proposals.  The release signals that a Small Business Advisory Panel will convene in October 2020 as required by the Small Business Regulatory Enforcement Fairness Act of 1996 (“SBREFA”) to assess the impact of the Bureau’s outline of proposals under consideration.  Participants in the SBREFA panel are invited to submit written comments by November 9, 2020; other interested stakeholders are invited to submit written comments by December 14, 2020.

Section 1071 amends the Equal Credit Opportunity Act to require financial institutions to collect certain data regarding applications for credit for women-owned, minority-owned, and small businesses, maintain records of responses, and report the data to the CFPB on an annual basis, in accordance with rules and guidance issued by the CFPB.  The purpose of Section 1071 is “to facilitate enforcement of fair lending laws and enable communities, governmental entities, and creditors to identify business and community development needs and opportunities of women-owned, minority-owned, and small businesses.”  15 U.S.C. § 1691o-2(a).

The Bureau’s proposals under Section 1071 have been long-awaited by industry associations, consumer groups, state regulators, Congress, and many other stakeholders, and the convening of the SBREFA panel represents the start of a rigorous and potentially lengthy rulemaking process.

A short list of highlights of the proposals follows after the jump, and we plan to publish a more detailed client alert on the CFPB’s outline of proposals in the near future.

Continue Reading CFPB Outlines Small Business Data Collection Proposals

On November 6, the Consumer Financial Protection Bureau (“CFPB”) held a symposium on the prospective implementation of Section 1071 of the Dodd-Frank Act, codified as 15 U.S.C. § 1691c-2, which requires financial institutions to inquire about and report to the CFPB whether a business credit applicant is a women-owned, minority-owned, or small business. The CFPB may make such information available to the public. Section 1071 is often viewed as HMDA for small business, a reference to the Home Mortgage Disclosure Act, which requires financial institutions to collect and report information about mortgage applicants to the CFPB, some of which is made public.

Section 1071 amended the Equal Credit Opportunity Act of 1974 in 2010 to “facilitate enforcement of fair lending laws” and to “enable communities, governmental entities, and creditors to identify business and community development needs and opportunities of women-owned, minority-owned, and small businesses.” In 2011, the CFPB announced that financial institutions’ obligations to collect information under the law would not go into effect until it issued implementing regulations. To date, however, the CFPB has not issued proposed or final regulations to implement Section 1071.

In her prepared remarks, CFPB Director Kathy Kraninger reassured symposium participants that Section 1071 rulemaking will be done with “care and consideration,” and with the goal of maintaining access to credit for small businesses, suggesting that the CFPB will exercise caution as it seeks to implement the law. Earlier this year, Director Kraninger and the CFPB were named as defendants in a lawsuit alleging a violation of the Administrative Procedures Act because the CFPB has not yet issued Section 1071 implementing regulations.

Continue Reading CFPB Holds Symposium on Section 1071 of Dodd-Frank