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C-Suite Wednesday — SBA Lending Industry Overwhelming Rejects CFPB Loan Data Collection Efforts

May 17, 2016

C-Suite Wednesday — SBA Lending Industry Overwhelming Rejects CFPB Loan Data Collection Efforts

By Bob Coleman
Editor, C-Suite Wednesday

I didn’t get a lot of responses to Monday’s survey about the Consumer Financial Protection Board’s request for comments about small business loan data, but those that responded were very passionate about their beliefs.

First the results.

How do you feel about CFPB’s collection of data for all Small Business Loans?

  • Strongly Oppose — 83%
  • Mildly Oppose — 3%
  • Strongly Support — 14%

Yes, we all know the poll is unscientific.

I run these polls to engage conversations within the community. Plus, all the comments are true opinions by small business lending and SBA lending professionals. I believe both sides have persuasive arguments. I have chosen to publish all comments as is. Some typos have been edited.

Also, I will list today’s report as a comment on the CFPB website, so that will save some of you a step.

Comments In Support of the CFPB

More importantly, why ICBA is calling on Congress to pass legislation that would repeal the statutory authority for new data-collection requirements on small-business loans? Anything to hide? Such as the imbalance of loans made to women and minority firms may be so skewed that a quasi CRA may be adopted to ensure compliance? If you’re saying you’re already burdened with data collection requirements then the info should already be available to flow to an ad-hoc report. Or better, advise the CFPB which reports you already compile encompass what they’re requesting and allow them to perform their own sort.

Banks have little or no interest in making loans to the the businesses that are truly small in the minds of the American consumer, not the broad definition used by the banking industry. This information needs to be collected to demonstrate the lack of interest in serving this sector of the economy.

Having the data will enable community banks to better serve their various clients. It is necessary if we are to improve financial services to underserved clients.

Comments Opposing the CFPB.

Bankers lend money to businesses that have proven historical or reasonable projected repayment ability. Gone are the days of the ‘old school good old boy banker’ who only lends money to white middle aged men. Anyone with a successful existing business or a plan for a successful new business is able to get a loan these days. Stop trying to force bankers to loan money to a certain percentage of people that fall into certain categories regardless of whether or not their business idea is viable just so the banks don’t get into hot water with their regulators.

Determining risk factors and subsequent interest rates for SBA loans are more difficult, not a simple cookie-cutter car loan that the CFPB can regulate on rate. SBA has their own rate regulations. In addition, the market itself helps regulate rates on SBA loans. We don’t need another government entity mandating what rates we can charge on SBA loans. The CFPB regulation would greatly affect secondary market sales.

Are you kidding me, this is just what we need, more government reporting.

SBA should be able to report data on their loans and not the Banks.

Government reporting is already overwhelming, do not need more.

It is just too much. Between external and internal audits, my department is dealing with some type of audit for 40 out of 52 weeks of the year.

SBA can easily get that info but the readers need to understand what they are reading. Enough regulation of small banks!!!

The problem with regulations are that each one taken independently looks reasonable – however, the ongoing burden of regulation is making viability as an independent community bank more difficult with each new regulation.

The thunderstorms of regulatory burden and oversight is drowning the community banking industry.

GOVERNMENT OVERREACH!!! Commercial Banking, and it’s Community Bank segment, are one the most regulated industries already. We don’t need more data reporting and the social engineering that will surely come from it! Free markets are efficient markets!

CFPB should be able to get their needed information from banks’ Call Reports

Get rid of the CFPB. Not a bank regulator but a tool of the Democratic party.

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