The Independent Community Bankers of America (ICBA) is calling on the Consumer Financial Protection Bureau to exempt more community banks and small businesses from proposed loan data collection and reporting requirements.
ICBA officials said the CFPB’s proposal on reporting mandates should exclude community banks with assets of $1.3 billion or less. Further, ICBA officials say it should define small businesses as those with $1 million or less in gross annual revenue. These updates would allow the CFPB to meet Dodd-Frank Act objectives while limiting the rule’s negative impact on small-business access to credit.
“Community bank small-business lending is complex—it should not be commoditized and subjected to simplified, rigid analysis that would have a chilling effect on small-business lending,” ICBA President and CEO Rebeca Romero Rainey stated. “While ICBA supports the proposal’s goal of expanding access to credit for minority-owned, women-owned, and small businesses, we are concerned that its overly broad coverage will disadvantage community bank business customers. The CFPB should tailor its Dodd-Frank Section 1071 rule to mitigate unintended consequences for small-business customers.”
In a letter to CFPB officials, ICBA made several other recommendations. Among them, they said CFPB should require the collection and reporting of congressionally mandated data points instead of nearly doubling the number and increasing the compliance burden. Also, they should publish a full privacy test open for public comment before determining which data to make public to avoid privacy risks for small-business applicants.
In addition, ICBA recommended that CFPB provide at least three years for financial institutions to comply or stagger implementation dates based on asset size to allow for good-faith compliance. Further, the proposal should provide a 12-month grace period after the compliance date because the rule will impose an entirely new environment for many community banks.
Further, ICBA recommends updating firewall requirements to avoid disproportionately burdening community banks due to their smaller staff size; allowing banks to report annually or as loan applications are received to support recordkeeping; and not requiring financial institutions to separately verify applicant-provided information.