U.S. Sen. Thom Tillis (R-NC) is leading a coalition of Republicans on the Senate Banking Committee in urging the Consumer Financial Protection Bureau (CFPB) to halt the effective date of the small business data collection rule for all banks.
The rule would require banks to compile, maintain, and submit to the bureau certain data on applications for credit for women-owned, minority-owned, and small businesses. Facilitating enforcement of fair lending laws. The purpose of the rule is to enable communities, governmental entities, and creditors to identify business and community development needs and opportunities for women-owned, minority-owned, and small businesses.
Currently, however, an injunction requested by the CFPB itself applies only to certain lenders, including some of the largest banks in the U.S. It does not cover the majority of small, community banks. The lawmakers said that this places local banks, which are often central to rural and low-income communities, at a distinct disadvantage.
“At your agency’s request, a recent ruling in the U.S. District Court has created a situation where only some lenders, including large systemically important lenders, will receive a temporary reprieve from working towards implementation of the CFPB’s Section 1071 small business data collection rule (‘the 1071 rule’), while others, including many community banks and all credit unions, must seek further relief from the judicial system,” Tillis and seven of his fellow Republicans on the Senate Banking Committee wrote in a letter to CFPB Director Rohit Chopra.
The senators added that they have deep concerns about the potential adverse impacts of the rule to implement Dodd-Frank Section 1071.
“In light of these recent developments, we respectfully urge the CFPB to exercise its existing legal authority by issuing a nationwide stay of the effective date of its Section 1071 rule for all credit unions and FDIC-insured banks, including community banks. This action would provide a crucial measure of certainty to small businesses and community banks, which are the cornerstone of the American economy, while we await a final determination of the validity of the Section 1071 rule by the Courts,” the senators concluded.