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NAFCU calls for CU feedback on section 1071 proposed rule
In a new Regulatory Alert sent to members Tuesday, NAFCU breaks down the CFPB's proposed rule to amend its Regulation B to implement changes made by section 1071 of the Dodd-Frank Act to the Equal Credit Opportunity Act (ECOA). Through the Regulatory Alert, the association is seeking member-credit union feedback on the proposal.
Of note, Dodd-Frank’s section 1071 amended the ECOA to establish a framework for “covered financial institutions” to collect and report data on women or minority-owned business and small businesses.
The Bureau's proposed rule would require credit unions and credit union service organizations (CUSOs) that originated at least 25 covered small business credit transactions in each of the two preceding calendar years to collect and report certain small business credit application data, including data related to the ethnicity, race, and sex of business applicants’ principal owners.
In the Regulatory Alert, NAFCU highlights that the Bureau is seeking approval from the Small Business Administration (SBA)to define a “small business” as any business that had $5 million or less in gross annual revenue in its preceding fiscal year. The rule would also generally require that credit unions and CUSOs establish a “firewall” to shield certain small business credit applicant data from underwriters.
In addition, the Regulatory Alert details how the proposed rule impacts credit unions and outlines questions for credit unions to consider when providing feedback on this topic.
NAFCU has consistently advocated for the exclusion of credit unions from any rulemaking requiring financial institutions to collect and report data related to small business lending, noting the constraints credit unions face associated with implementation of the data collection.
Comments are due to the CFPB 90 days after publication in the Federal Register; credit unions are encouraged to submit comments to NAFCU through the alert. Subscribe to receive Regulatory Alerts.