Business loan

NYDFS Concerned About CFPB’s Small Business Lending Data Collection Proposal

January 6, NYDFS Published a comment letter responding to CFPB requests Notice of Proposed Rulemaking (NPRM), “Small Business Lending Data Collection under the Equal Credit Opportunity Act (Regulation B).” The NPRM – mandated under Section 1071 of the Dodd-Frank Act – would require a wide range of lenders to collect data on the loans they make to small businesses, including information on the loans themselves , borrower characteristics, and demographic information about the borrower’s primary owners. This information would be communicated annually to the Bureau and possibly published by the Bureau on its website, with possible modifications. According to the Bureau, the stated intent of the law is to “facilitate the enforcement of fair lending laws and enable communities, government entities and creditors to identify business and small business communities owned by women, minorities and”. (Covered by a Buckley Special Alert.)

In its comment letter, NYDFS discussed its responsibilities for reviewing state-chartered banking institutions for compliance with the New York Community Reinvestment Act (NYCRA), New York Banking Law § 28-b, which, according to the NYDFS, largely mirrors the current federal Community Reinvestment Act (CRA). Additionally, NYDFS said it is reviewing regulated institutions to comply with state fair lending requirements and agreed with the Bureau that “collecting critical information about minority and women-owned businesses (MWOB) to address fair lending issues and enable financial institutions to identify gaps in the market” is an important goal. To this end, NYDFS is in the process of implementing its own MWOB data collection regulations in NYCRA framework, which would require New York State chartered banking institutions to begin collecting MWOB-related data.(Covered by InfoBytes here.) Because of the similarities between the proposed regulations and the Bureau’s NPRM, and to avoid placing an undue burden on institutions covered by both regulations, the NYDFS’s proposed regulations include language that “would permit, but not require not, NYDFS to address compliance with the CFPB’s rule implementing Section 1071 in compliance with NYCRA’s MWOB-related data collection regulations. »

Two specific issues were raised in response to the Bureau’s NPRM. First, the NYDFS expressed concern about the NPRM’s silence on whether the Bureau intended to share more detailed data with state regulators to help states identify fair lending violations and enforce anti-discrimination laws, even if this information is not made available to the public. The NYDFS urged the Bureau to include specific language stating that it “may share all data submitted by financial institutions with state regulators pursuant to information sharing agreements between the CFPB and state regulators.” Second, NYDFS asked the Bureau to reconsider its proposal to require data collection only for MWOBs with a threshold of $5 million or less in gross annual revenue. In particular, NYDFS warned of the risk of “dissimilarity in data collected by lenders for submission to the CFPB and NYDFS” because NYDFS’s proposed rule “requires evaluation of MWOB loans without regard to size. “. NYDFS pointed out that this dissimilarity “could prevent NYDFS from considering that compliance with the CFPB rule is sufficient to comply with the NYDFS rule.”