As we reported last year, the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), among other things, required the Consumer Financial Protection Bureau (CFPB) to enact regulations governing the collection of certain small business loan data. Section 1071 of the Dodd-Frank Act amended the Equal Credit Opportunity Act (ECOA) to read: “in the case of an application for credit from a financial institution for [a] women-owned, minority-owned, or small business, the financial institution must: (1) investigate whether the business is woman-owned, minority-owned, or small business. The amendment requires financial institutions to compile and retain certain mandatory credit application information, as well as discretionary data points that the CFPB believes will further support the purpose of Section 1071. financial” is broadly defined in Section 1071 as “any partnership, corporation, corporation, association (whether or not incorporated), trust, estate, cooperative organization or other entity that engages in financial activity.”
On September 1, 2021, the CFPB published a proposed rule to implement changes to the ECOA. According to the CFPB, the proposed rule (nearly 1,000 pages) discusses its “approach to the privacy interests and publication of Rule 1071 data; protect certain demographic data of subscribers and other individuals; record keeping requirements; enforcement provisions; and the effective and compliance dates of the proposed rule. Comments on the proposed rule were due January 6, 2022. At the time of this article’s publication, approximately 2,100 comments have been filed for consideration by the CFPB. Comments from individuals, trade associations, small businesses, credit unions, financial institutions, various regulatory bodies and other interested parties are included. Comments, suggestions and requests are wide ranging – from asking for exemptions to rule based on industry type; to seek advice on the implementation of the proposed rule; to ask the CFPB to expand the proposed rule to require other industries to report data and to report data on other businesses, not just small businesses. The current status of the process, the proposed rule, and comments can be found here.
Miles & Stockbridge is closely monitoring developments in this area and remains ready to help customers navigate these proposed changes.
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