Two South Carolina lawmakers are reaching out to the head of the Consumer Financial Protection Bureau (CFPB) about a new data collection rule that they say would place an undue burden on small business owners, farmers, and lenders.
The proposed rule is called the Small Business Lending Data Collection Under the Equal Credit Opportunity Act (Regulation B). It would amend Regulation B to implement an amendment to the Equal Credit Opportunity Act made by section 1071 of the Dodd-Frank Act.
The rule would require covered financial institutions to collect and report to the CFPB data on applications for credit for small businesses, including those owned by women or minorities.
“We feel that the CFPB has failed to take the appropriate steps to engage with these institutions on this proposed rule, and by doing so, we believe that the Bureau has fashioned a rule that would hurt not only these lending institutions but American farmers themselves,” Sen. Tim Scott and Rep. William Timmons (R-SC) wrote in a letter to CFPB Director Rohit Chopra. “In short, we feel that these actions being proposed by the CFPB are misguided and ill-informed, especially considering the challenges that farmers are currently facing due to rising inflation, prolonged supply chain disruptions, and labor shortages. We strongly urge you to change course.”
The lawmakers say the proposed rule would cover a greater proportion of farm credit lenders than any other category of lenders. While it would impact 40 percent of all depository institutions, it would impact 100 percent of farm credit lenders., they said. This is due to the proposal’s definitions of “small business” and “business credit” that they say do not take into account the inherent differences between farms and other businesses.
“If the CFPB had actively worked to hear the concerns of the lenders they regulate, this type of oversight would not have happened,” they wrote. “At a time when the federal government seems to be doing everything it can to make farmers’ jobs more difficult—we believe this unnecessary regulatory expansion is ill-timed and hurtful.”