As the Consumer Financial Protection Bureau (CFPB) prepares to rethink its final rule implementing small business lending requirements detailed in Sec. 1071 of the Dodd-Frank Act, community banking advocates expressed support for bills requiring the bureau to delete information collected about loan applicants for the sake of privacy.
The bills, introduced by Rep. Blaine Luetkemeyer (R-Mo.) in the House and Sen. John Rose (R-Tenn.) would require the CFPB to “issue a rule before deleting or modifying certain small business loan data, and for other purposes.”
Independent Community Bankers of America (ICBA) President and CEO Rebeca Romero Rainey wrote to both lawmakers in support of the “Bank Loan Privacy Act.”
“The act would address this privacy risk by requiring the CFPB to conduct a rulemaking with an opportunity for public comment on proposed modifications and deletions to data the bureau will publish,” Romero Rainey wrote. “The purpose of the proposed modifications or deletions would be to protect the privacy of credit applicants. Financial institutions as well as small business credit applicants should have a voice in this important determination and should understand what data will be made public before it is collected.”
Implementation of the CFPB final rule was stayed in March by the Fifth Circuit Court of Appeals pending further review by the bureau’s new leadership under the Trump administration. It requires covered institutions to collect and report 81 data points about small business loan applicants – including information about their sex, race and sexual orientation – for the purpose of mitigating potential discrimination based on those characteristics.
ICBA and other financial services organizations have strongly opposed the rule and the underlying statute, asserting it would be overly burdensome to smaller institutions and represent an invasion of privacy for loan applicants.