CFPB to release outline on small-business data rule
The Consumer Financial Protection Bureau plans to release an outline Tuesday on how it will develop a rule governing the collection of small-business loan data, Director Kathy Kraninger said Monday.
The rule is one of the last provisions of the Dodd-Frank Act that still needs to get implemented. The 2010 law requires that the bureau collect information that can be used to identify discrimination in small-business lending, similar to how regulators use mortgage data collection under the Home Mortgage Disclosure Act.
"The small-business lending landscape is very different than the mortgage space so undertaking this is very challenging,” Kraninger said at an event of the National Association of Federally-Insured Credit Unions. ”The outline is going to come out tomorrow so the mystery will no longer be around what things the bureau is considering, and the public will have the opportunity to look at that outline and provide letters and comments."
Kraninger said the next step in the development of a rulemaking will be convening a panel of experts in the next month or so.
Kraninger and the CFPB were sued in May 2019 by the California Reinvestment Coalition for failing to move forward with a rulemaking. Under a settement, the bureau agreed to a court-supervised process that includes public reporting and specific timetables for the development of the regulation.
The CFPB has struggled for years to conduct a rulemaking, in part, because the Equal Credit Opportunity Act prohibits collecting race and gender information from small businesses.
A big concern for consumers what controls will be put in place to allow consumers to control their own data, including whether fintech providers can have access and sell that data.
The CFPB's outline and an eventual proposal are expeced to draw enormous interest from both banks, which have at times been leery of third-party providers' access to consumer data, and fintech firms that rely on consumers’ ability to access data.