CBA officials recently forwarded correspondence to the bill’s author, Rep. Robert Pittenger (R-NC), as means of backing the bill, which would repeal Section 1071 of the Dodd-Frank Act – requiring lenders to collect multiple data points from business loan applications and report to the government data on certain applications.
“Each and every business loan is unique and the proposed reporting structure would offer regulators little meaningful information,” Richard Hunt, CBA president and CEO, wrote. “Requiring lenders to collect extensive data points will reduce lending, especially for small businesses, due to potential misuse of data once it leaves the bank as well as adding burdensome compliance costs.”
In the letter Hunt referenced CBA members anticipate the complex new data collection requirements under Section 1071 could lead to a chilling of small business lending due to potential costly litigation from the misuse of collected information and burdensome compliance imposed on small businesses and financial institutions of all sizes.
“Many institutions may choose to significantly limit their small business lending portfolios or eliminate from their balance sheets small business loans entirely due to risk exposure,” Hunt wrote. “In order to prevent a reduction in small business lending, CBA supports the Right to Lend Act of 2017 to repeal Section 1071.”