Bradley partner Mike Gordon was quoted in American Banker about the scope of the Consumer Financial Protection Bureau’s (CFPB) small-business loan data requirements. The CFPB recently backtracked on a small-business loan suggestion the agency made during the Trump administration. On Wednesday, the agency released a proposal mandated by Congress that would force banks and other lenders to collect and send data meant to identify discrimination and barriers to credit in small-business lending.
The CFPB is also proposing that publication of the data would satisfy financial institutions’ statutory obligation to make data available to the public upon request. This would potentially level the playing field between banks and fintechs.
Gordan said, “There has been a movement of banks pointing at fintechs and saying regulate them, and this could be seen as part of that trend with tools for regulators to go after fintechs in the small-business space.”
Banks will likely raise concerns that the data will result in more enforcement actions for fair-lending violations.
"Banks are going to be worried about the liability if they collect data on demographics, race and gender, and the CFPB will try to make disparate impact or fair-lending cases out of it,” Gordon explained. “It’s another fair-lending risk that has to be managed in a whole new way [because the data] gives regulators a lot more ammunition to build fair lending cases."
The original article, “Scope of CFPB small-business loan data requirements worries banks,” was published on American Banker on September 1, 2021. (login required)