October 13, 2021
C-Suite Wednesday – The Consumer Financial Protection Bureau’s Proposed Loan Data Collection Rule
The Consumer Financial Protection Bureau (CFPB) issued a notice of proposed rulemaking on September 1st, and on October 8th, they published their proposed rule to implement Section 1071 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. A 90-day comment period began on October 8th and will end on January 6, 2022.
Section 1071 of the Dodd-Frank Act would require financial institutions that originated 25 or more credit transactions to small businesses to collect and report specific data and demographic information to the CFPB. The goal is to enforce fair lending laws and “enable communities, governmental entities, and creditors to identify business and community development needs and opportunities of women-owned, minority-owned, and small businesses,” as stated in Section 1071.
If enacted, the data that the CFPB will be collecting is data supplied by the financial institution, data provided by the applicant, and data about the applicant’s and small business owner(s)’ demographics. On a yearly basis, the covered financial institutions would report the data from the previous calendar year by June 1st. All the collected data, unless omitted for privacy reasons, would then be available to the general public on the CFPB’s website.
The rule would become effective 90 days after its publication if implemented, and compliance wouldn’t be required until 18 months later. The CFPB would propose transitional provisions that would ease the implementation of the rule.