Featured Product

    CFPB Proposes Rule on Small Business Lending Data Collection

    October 08, 2021

    The Consumer Financial Protection Bureau (CFPB) proposed to amend Regulation B to implement changes to the Equal Credit Opportunity Act (ECOA) under Section 1071 of the Dodd-Frank Act. Consistent with section 1071, CFPB is proposing to require covered financial institutions to collect and report data on applications for credit for small businesses, including those that are owned by women or minorities. This rule would, if finalized, require lenders to disclose information about their lending to small businesses, allowing community organizations, researchers, lenders, and others to better support small business and community development needs. Under the proposal, lenders would be required to report the amount and type of small business credit applied for and extended, demographic information about small business credit applicants, and key elements of the price of the credit offered. The comment period on this proposal ends on January 06, 2022.

    CFPB is proposing to apply the Section 1071 requirements to “covered financial institutions.” A covered financial institution would be a financial institution that satisfies an origination threshold. For this purpose, a financial institution would be any partnership, company, corporation, association (incorporated or unincorporated), trust, estate, cooperative organization, or other entity that engages in any financial activity. A financial institution would satisfy the origination threshold and thus be a covered financial institution, if it originated at least 25 credit transactions that would be “covered credit transactions” to “small businesses” in each of the two preceding calendar years. The final rule to implement Section 1071 would become effective 90 days after publication in the Federal Register, though compliance with the rule would not be required until approximately 18 months after publication in the Federal RegisterThe key proposals of CFPB include the following:

    • To permit creditors that are not covered financial institutions to voluntarily collect and report data under Section 1071 in certain circumstances.
    • To require that covered financial institutions collect and report data regarding covered applications from small businesses for covered credit transactions.
    • To define a “covered application”—which would trigger data collection and reporting and related requirements—as an oral or written request for a covered credit transaction that is made in accordance with procedures used by a financial institution for the type of credit requested.
    • To define a “small business,” about whose applications for credit data must be collected and reported, by reference to the definitions of “business concern” and “small business concern” as set out in the Small Business Act and Small Business Administration (SBA) regulations.
    • To address the data points that must be collected and reported by covered financial institutions for covered applications from small businesses. Many of the proposed data points are specifically enumerated in section 1071; for the others, CFPB is proposing to use the authority granted by Section 1071 to require financial institutions to collect and report any additional data that CFPB determines would aid in fulfilling the purposes of Section 1071.
    • To implement the requirement in Section 1071 that certain data collected be shielded from underwriters and certain other persons; CFPB refers to this as the “firewall.”
    • To require that data be collected on a calendar year basis and reported to CFPB on or before June 01 of the following year. Financial institutions reporting data to CFPB would be required to provide certain identifying information about themselves as part of their submission. CFPB is proposing to provide technical instructions for the submission of data in a Filing Instructions Guide and related materials.

     

    Related Links

    Comment Due Date: January 06, 2022

    Keywords: Americas, US, Banking, SMEs, Data Collection, Lending, Small Business Lending, Credit Risk, Dodd-Frank Act, Disclosures, CFPB

    Related Articles
    News

    HKMA Publishes Hong Kong Taxonomy for Sustainable Finance

    The Hong Kong Monetary Authority (HKMA) published the Hong Kong Taxonomy for Sustainable Finance.

    May 21, 2024 WebPage Regulatory News
    News

    EU Taking Steps to Set Out and Enforce AI Regulations

    Many believe that the transformative power of generative artificial intelligence (GenAI) has potential to reshape the financial sector in the time to come.

    May 21, 2024 WebPage Regulatory News
    News

    ISSB Releases Digital Sustainability Disclosures Taxonomy

    The themes of the harmonization and interoperability of sustainability disclosure standards among various jurisdictions remain at the top-of-mind for international standard-setting bodies.

    May 21, 2024 WebPage Regulatory News
    News

    BCBS Report Studies Implications of Digitalization of Finance

    The Basel Committee on Banking Supervision (BCBS) published a report that examines the implications of the digitalization of finance for banks and supervisors.

    May 21, 2024 WebPage Regulatory News
    News

    BCBS Consults on Guidelines for Counterparty Credit Risk Management

    The Basel Committee on Banking Supervision (BCBS) is seeking comments, until August 28, 2024, on guidelines for counterparty credit risk management of banks.

    May 21, 2024 WebPage Regulatory News
    News

    BIS Paper Outlines Vision for Future Financial System

    In a recent paper, the General Manager of Bank for International Settlements (BIS) and the Indian entrepreneur (Infosys co-founder) Nandan Nilekani have laid out a vision for the Finternet, which is proposed to be a network of multiple financial ecosystems, much like the internet.

    April 29, 2024 WebPage Regulatory News
    News

    NGFS Outlines Options for Supervisory Review of Transition Plans

    The Network for Greening the Financial System (NGFS) recently published three reports on the use of transition plans to boost sustainable finance and manage climate-related financial risks.

    April 29, 2024 WebPage Regulatory News
    News

    BCBS Issues Discussion Paper on Climate Scenario Analysis

    The Basel Committee on Banking Supervision (BCBS) issued a discussion paper on the use of climate scenario analysis to strengthen the management and supervision of climate-related financial risks.

    April 29, 2024 WebPage Regulatory News
    News

    OSFI Issues Phase2 Consultation on Climate Scenario Exercise for Banks

    The Office of the Superintendent of Financial Institutions (OSFI) recently announced a consultation on the second phase of the Standardized Climate Scenario Exercise (SCSE) for banks and other financial institutions it regulates in Canada.

    April 25, 2024 WebPage Regulatory News
    News

    CFIT to Chair Open Finance Taskforce Announced by UK Government

    The UK government announced the formation of an industry-led Open Finance Taskforce, chaired by the Center for Finance, Innovation, and Technology (CFIT).

    April 25, 2024 WebPage Regulatory News
    RESULTS 1 - 10 OF 8967