U.S. Rep. French Hill (R-AR) on Feb. 15 sponsored a bill that aims to protect America’s small banks and lenders from specific compliance standards proposed by the Consumer Financial Protection Bureau (CFPB).
The Small Lenders Exempt from New Data and Excessive Reporting (LENDER) Act, H.R. 6732, which is cosponsored by U.S. Reps. Blaine Luetkemeyer (R-MO) and Roger Williams (R-TX), would alter CFPB requirements associated with small business loan data collection, according to the text of the bill.
The Small LENDER Act was introduced as part of a three-bill package with Reps. Luetkemeyer and Williams that includes H.R. 6739, which would require the CFPB to issue a rule before deleting or modifying certain small business loan data, and H.R. 6274, the FDIC Board Accountability Act, which would revise the membership requirements for the FDIC Board of Directors.
“Access to capital for small businesses is the lifeblood of our local communities, and smaller lenders often lead the way in investing in the neighborhoods they serve,” the three congressmen said in a joint statement. “However, the CFPB proposed regulation would actually hurt small businesses by making the cost of credit more expensive and imposing significant compliance costs that fall disproportionately on smaller companies.
“That’s why we are proud to introduce this bill to provide regulatory relief to community banks and other small business lenders,” said Rep. Hill and his colleagues.
The CFPB in September 2021 proposed a rule amending Regulation B to implement changes to the Equal Credit Opportunity Act that was made by section 1071 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act).
Consistent with section 1071, the bureau is proposing to require covered financial institutions to collect and report data to CFPB on applications for credit for small businesses, including those that are owned by women or minorities, according to the bureau’s website.
The CFPB’s proposal also addresses its approach to privacy interests and the publication of section 1071 data; shielding certain demographic data from underwriters and other persons; recordkeeping requirements; enforcement provisions; and the proposed rule’s effective and compliance dates.
Rep. Hill and his Republican colleagues say that in the absence of Congress repealing Section 1071 of Dodd-Frank, the Small LENDER Act would make necessary changes to exempt smaller banks and other lenders from having to comply with the CFPB small business data collection regulation.
Specifically, H.R. 6732 would codify “financial institution” as one that originates at least 500 covered transactions in each of the last two years, as opposed to the 25-transaction threshold proposed in the CFPB’s notice of proposed rulemaking (NPRM), according to a bill summary provided by Rep. Hill’s staff.
The bill also would codify “small business” as one with gross annual revenues of $1 million or less in the last year instead of $5 million or less as defined in the NPRM, and would extend the effective compliance date with the final rule to be three years after publication in the Federal Register, plus a two-year grace period, as opposed to the 18-month implementation period in the NPRM, the summary says.