NEWS: The CFPB has announced in a press release that it “will not prioritize enforcement or supervision” of its small business lending data collection rule.
The rule, which implements Section 1071 of the Dodd-Frank Act, requires many lenders to collect and report data on lending to small businesses with gross revenue of $5 million or less in their previous fiscal year. The small business lending rule was designed to help authorities enforce fair lending laws and to uncover discrimination in lending against minority-owned, women-owned, and LGBTQI+-owned businesses. The League has information on the rule in our ii Release No. B083.
In February, a federal appeals court stayed (i.e., put on hold) compliance with the rule, but only for the parties to a particular lawsuit. The CFPB now says that it would be unfair to enforce the rule for lenders that are not covered by the appeals court’s ruling. As a result, the CFPB’s newly announced non-enforcement stance will apply nationwide.
As The League wrote in an April Compliance Courier, the CFPB has said that it plans to start a new rulemaking process to revise the rule “as expeditiously as reasonably possible.”
In the meantime, one prominent national law firm has cautioned that the CFPB’s new press release “does not impact the ability of state regulators to bring enforcement actions related to violations of the rule ….” It is unknown whether state regulators plan to do so, however.
The League will keep you updated about further developments regarding this rule.