In response to mischaracterizations regarding the industry’s position on efforts to expand small business data collection, the Consumer Bankers Association (CBA) submitted a Letter to the Editor in American Banker last Friday, reaffirming banks’ enduring commitment to expand access to credit in underserved communities.

As CBA’s General Counsel and Senior Vice President David Pommerehn wrote:

“America’s leading banks long have supported efforts from policymakers to advance our shared goals of financing the American Dream for minority- and woman-owned businesses and expanding access to credit in underserved communities. New [CFPB] data-collection requirements in the small-business lending market can help further this objective, and banks are fully committed to working with the Bureau on developing a well-founded Section 1071 rule that delivers on its intent for years to come.”

Pommerehn added:

“CBA has advocated for the Bureau to consider several key recommendations we believe will help minimize unintentional consequences for the small businesses we are all working to support, including a phased approach for implementation. These new requirements must also apply to all financial institutions — both bank and nonbank.”

He concluded: 

“It’s unfortunate [a recent op-ed] mischaracterized these good-faith considerations, which are intended not to sabotage the CFPB’s efforts, but to strengthen the accuracy and efficiency of the Bureau’s collection process.”

To read the full Letter to the Editor, click HERE. 

Background 

In January, CBA submitted a comprehensive letter in response to the CFPB’s Notice of Proposed Rulemaking (NPRM) for Section 1071 of the Dodd-Frank Act. In the letter, CBA outlined several key recommendations, including:  

• Implementation Timeline: Providing lenders adequate lead time (no less than 36 months) to develop data collection platforms and comply with new requirements will help ensure data is accurately captured and reported without stifling efforts to expand small business’ access to credit. 
• Standardized Definitions: Streamlining the standardized definition of what will constitute a “covered borrower” (small businesses whose information must be collected) will help yield the collection of clear and reliable data that can be used to draw meaningful conclusions.
• Adherence To Existing Systems: Allowing lenders to satisfy new reporting requirements through the use of their own existing reporting systems will help minimize potential disruption to borrowers while ensuring the collection process is efficient and accurate.
• Level Playing Field: To ensure the intent of Section 1071 is successfully delivered in the market, the CFPB must apply new requirements equally to all small business lenders, including nonbanks and financial institutions of all sizes. 

To read more about Section 1071 and CBA’s recommendations to the CFPB, click HERE and HERE.

To read CBA’s statement following the Bureau’s issuance of a Notice of Proposed Rulemaking (NPRM) for Section 1071 of the Dodd-Frank Act in September, click HERE.