Re-proposed 1071 rule addresses challenges faced by credit unions
The new proposed changes to the CFPB’s small business lending data collection rule appropriately balance the goals of transparency and fair lending enforcement with the practical challenges credit unions face. In comments filed Monday, America’s Credit Unions outlined why these changes will enable credit unions to keep serving their members effectively.
Section 1071 of Dodd-Frank authorizes the CFPB to collect data from small business lenders. The current proposed rule updates the CFPB’s 2023 rule (under the previous administration) that would have created burdens for credit unions and challenges for both lenders and small businesses.
“Meaningful progress has been made and many concerns raised by credit unions have been positively addressed,” the letter notes, including:
- Raising the definition of a covered financial institution to 1,000 covered transactions (up from 100);
- Reducing the gross annual revenue threshold for a “small business” to $1 million or less (down from $5 million);
- Removing discretionary data points that were included in the 2023 final rule to streamline data collection, reduce operational burdens, and simplify discussions with applicants;
- Replacing the tiered compliance schedule with a single compliance date of Jan. 1, 2028, for all covered financial institutions that originated at least 1,000 covered transactions for small businesses in each of calendar years 2026 and 2027; and
- Eliminating several non-statutory requirements that previously dictated exactly when and how lenders had to collect applicant-provided demographic and ownership data.
The letter also included additional suggestions to aid compliance, ranging from a $50,000 minimum threshold for covered transactions, encouraging the CFPB to release only aggregated data at the state level, and requesting Federal Home Loan Banks be explicitly excluded from the final rule, among others.