CFPB's Kraninger commits to finalizing small-business lending rule

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WASHINGTON — Consumer Financial Protection Bureau Director Kathy Kraninger committed Thursday to finalizing a long-awaited small-business lending regulation that will protect consumer privacy and minimize burdens on small businesses, one day after a court mandate outlined a process for drafting and implementing the rule.

The Dodd-Frank Act required the CFPB to develop a small-business lending regulation to collect information that might be used to identify instances of discrimination, but the agency has dragged its feet on implementing such a rule.

But under a settlement filed Wednesday with the California Reinvestment Coalition, the CFPB agreed to a court-supervised process that includes public reporting and specific timetables for the development of the rule.

The development of the rule will be “a big issue” for the CFPB “in the coming year and beyond that,” said director Kathy Kraninger.
The development of the rule will be “a big issue” for the CFPB “in the coming year and beyond that,” said director Kathy Kraninger.

“It's been a difficult issue since the beginning of the agency, and we have not made a lot of progress on this, but I did commit to it when I was confirmed a year ago that we will move forward with this rulemaking,” said Kraninger, speaking at a National Diversity Coalition event Thursday.

The CFPB also agreed to convene a Small Business Advocacy Review panel no later than Oct. 15, 2020. The report that emerges from that panel’s work must be completed within 60 days. After that, the CFPB and the California Reinvestment Coalition must reach an agreement on a deadline for the issuance of the final rule.

Under Section 1071 of Dodd-Frank, small-business lenders are supposed to be subject to data-reporting obligations that resemble the requirements for mortgage lenders under the Home Mortgage Disclosure Act. The law requires the collection of certain information but also gives the CFPB discretion over whether additional data should be gathered.

While consumer advocates have called for strong reporting requirements, others have argued that more requirements would result in undue burdens and costs on lenders.

Kraninger acknowledged those concerns, and committed to fully understanding how any data collection rule would affect small institutions, as well as what privacy issues could arise.

“We know that there's concern ... [about] the burden on the small entities that are actually doing this lending,” she said. “We don't want to do anything that actually curtails the purpose, which is to expand access to credit. If we end up getting institutions leaving, that market that would be a tremendous problem, and frankly the opposite effects that we're looking for.”

The development of the rule will be “a big issue” for the CFPB “in the coming year and beyond that,” Kraninger added.

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