The Consumer Financial Protection Bureau must complete data collection rules to identify potential discrimination in small business loans early next year, a federal judge has ruled.
Judge Jeffrey S. White of the U.S. District Court for the Northern District of California on July 11 approved an agreement between the CFPB and California-based consumer advocates for the small business loan data collection rule to be completed by March 31.
Section 1071 of the 2010 Dodd-Frank Act requires the CFPB to collect data on race, gender, ethnicity, loan terms and other characteristics of small business loans, for the purpose of identify and address violations of the Equal Credit Opportunity Act. The CFPB already collects similar data for mortgages under the Home Mortgage Disclosure Act.
The CFPB failed to tackle those rules until the California Reinvestment Coalition and other consumer advocates sued the bureau in May 2019.
The parties eventually reached an agreement and the CFPB published a proposal to conduct the data investigations in September 2021.
The proposal asks banks, fintechs and other non-bank commercial lenders to provide demographic data on loans to small businesses that made less than $5 million in gross revenue in the previous year.
Banks and others said the data collection rule should have a broader exemption for small lenders who make only a handful of small business loans, and raised other concerns with the bureau.
The case is California Reinvestment Coalition v. CFPB, ND Cal., No. 4:19-cv-02572, Stipulation and Order 7/11/22