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Volume X, Number 298

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CFPB Publishes Proposals to Implement Small Business Lending Data Collection Rulemaking

In connection with the requirements set forth in Section 1071 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Section 1071), the Consumer Financial Protection Bureau (CFPB) released on September 15, both a high-level summary (Summary) and a more detailed outline of the proposals it is considering (Outline) to implement Section 1071’s mandate that the CFPB require financial institutions to “compile, maintain, and submit to the [CFPB] certain data on applications for credit for women-owned, minority-owned, and small businesses.”

The Outline is a comprehensive document that discusses (1) the relevant law, (2) the regulatory process, (3) the rule proposals the CFPB is considering to implement Section 1071, and (4) an economic analysis of the potential impacts of the proposals on directly affected small entities. Among other provisions, the CFPB notes that it is considering limiting the scope of the rule’s requirement to all small businesses, rather than including both small businesses and women- and minority-owned businesses, given the CFPB’s position that this definitional construct would “cover nearly all women-owned and minority-owned businesses.” The CFPB is also considering creating an exemption from the definition of “financial institution” to which the proposed rule would apply through the establishment of “either or both a size-based and/or activity-based threshold.”

In terms of the scope of products to be covered by the rule, the CFPB states that it is proposing that the term “covered products” include term loans, lines of credit and business credit cards but exclude consumer-designated credit, leases, factoring, trade credit and merchant cash advances.

The CFPB is also considering the right of an applicant to refuse to provide certain information as well as an effective date of two years after the issuance of a final rule.

Public comment on the Outline will be accepted by the CFPB until December 14.

The Summary is available here.

The Outline is available here.

 

©2020 Katten Muchin Rosenman LLPNational Law Review, Volume X, Number 263
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About this Author

Christina J. Grigorian, Banking legal Specialist, Katten Muchin Law firm
Special Counsel

Christina J. Grigorian counsels clients in all matters related to banks, bank holding companies, and state and foreign-licensed consumer and commercial lenders. Ms. Grigorian provides advice to the firm’s financial institution clients concerning structural and operational issues, including legislative developments impacting such operations, and has worked with companies and individuals in the establishment of de novo entities, including national banks, federal savings banks and state-chartered institutions, as well as state-licensed lenders. She has also counseled clients with respect to...

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