By: Denise Simon | Founders Code
Banks and other lenders are about to be forced to be federal agents… it goes beyond banks and lenders by the way… it includes payday retail and pawn shops.
The Consumer Financial Protection Agency is drafting rules to require banks and lenders to collect demographic information from small-business-loan applications — a process that has taken more than a decade.
But a group of Democratic senators has raised concerns over the new rule even as they urged the agency to issue a final rule quickly, according to a Jan. 13, 2022 letter. That letter was signed by Small Business & Entrepreneurship Committee Chair Ben Cardin, D-Md., Senate Committee on Banking, Housing and Urban Affairs Chair Sherrod Brown, D-Ohio., Ron Wyden, D-Ore., Dick Durbin, D-Ill., and Cory Booker D-N.J.
“For years, we have pushed the CFPB to move forward on this important rulemaking, and we are pleased that you are doing so now. It is the CFPB’s responsibility to carry out this mandate by issuing a final rule as soon as practicable,” the senators wrote in the letter.
At issue is a provision from The Dodd-Frank Act, which Congress passed in 2010, required that lenders collect such demographic data, including business ownership by race and gender, in an effort to track the lending environment for small businesses. The CFPB ultimately issued a proposed rule in 2021, with comments due Jan. 6, 2022. The agency received more than 2,100 comments, according to Regulations.gov, including from banking industry groups that believe the new rule is too onerous, to lending advocacy groups that feel the new rule does not do enough to ensure the data collected will show a full picture of small business lending.