On Wednesday, May 10, the Consumer Financial Protection Bureau issued a request for information (RFI) on the small-business lending marketplace[1] — the first step in an anticipated rulemaking pursuant to Section 1071 of Dodd-Frank.[2] Section 1071 authorizes the bureau to implement rules that will require collection of data on loans made to women-owned and minority-owned businesses in order to monitor for potential violations of the Equal Credit Opportunity Act (ECOA).[3] While this rulemaking has long been anticipated, the chances of it being finalized are far from certain. Strong opposition to Section 1071 by Republicans, along with the fact that the rulemaking process will be finalized under Director Richard Cordray's replacement, will create serious headwinds. Some members of the business community quickly responded to the RFI, calling for a narrow approach that ensures that any rule does not raise compliance costs that become overly burdensome.[4]
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Footnotes
[1]
https://s3.amazonaws.com/files.consumerfinance.gov/f/documents/201705_cfpb_RFI_Small-Business-Lending-Market.pdf.
The bureau also released a white paper on the small business
lending landscape.
https://s3.amazonaws.com/files.consumerfinance.gov/f/documents/201705_cfpb_Key-Dimensions-Small-Business-Lending-Landscape.pdf
[2] Dodd-Frank Act § 1071, codified at 15 U.S.C. § 1691 c-2.
[3] The CFPB's jurisdiction is largely limited to the marketplace for consumer financial products and services and does not encompass commercial lending generally. See 12 U.S.C. § 5481(5). However, ECOA is the one law the bureau has authority to enforce with respect to commercial lending directly, although it does have authority over personal loans and Reprinted with Permission from Law360 credit cards that are then used for small business purposes.
[4] Kate Berry, American Banker, Bankers Raise Fears on new CFPB Small Bix Collecting Effort (May 10, 2017), available at https://www.americanbanker.com/news/bankers-raise-fears-on-new-cfpb-small-biz-collecting-effort?utm_campaign=daily%20briefing-may%2011%202017&utm_medium=email&utm_source=newsletter&eid=2428480ec7d2a0e52a8e6fc17c9860a4.
Originally published by Law360
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