Berger asks Bureau to revisit section 1071 proposed rule data collection projections in light of potential SBA direct lending program
NAFCU President and CEO Dan Berger Monday wrote to CFPB Director Rohit Chopra to address the Bureau's proposed rule to implement changes made by section 1071 of the Dodd-Frank Act and its likely effects as related to a proposal in the Build Back Better Act to authorize the Small Business Administration (SBA) to establish a direct 7(a) lending program.
The Bureau’s section 1071 proposed rule would require credit unions and credit union service organizations (CUSOs) that originated at least 25 covered small business credit transactions in each of the two preceding calendar years to collect and report certain small business credit application data, including data related to the ethnicity, race, and sex of business applicants’ principal owners.
While NAFCU will respond more fully to the Bureau’s section 1071 proposed rule during the comment period, Berger expressed time-sensitive concerns regarding the interaction between the proposed rule and proposed direct lending authorization.
"Not only does the legislative proposal risk the SBA becoming credit unions’ direct lending competitor, but the legislative proposal also risks fintechs, who have never been permitted to originate 7(a) loans, driving credit unions entirely out of 7(a) lending," wrote Berger. "And the proposed rule, if adopted as written, would cause many credit unions to exit the business lending market altogether.
"Operating alongside one another, the legislative proposal and the proposed rule risk greatly damaging the vibrant, robust business lending market without which continued and broader small business successes are impossible," Berger added.
Berger encouraged the Bureau to examine the areas where the Bureau's proposed rule and the SBA direct lending program may have negative impacts on the credit union industry's involvement in small business lending.
The association has repeatedly advocated for the exclusion of credit unions from any burdensome rulemaking requiring financial institutions to collect and report data related to small business lending, noting the constraints credit unions face associated with the implementation of the data collection. NAFCU sent members a Regulatory Alert breaking down the proposal and soliciting credit union feedback.
Read Berger's full letter here. NAFCU remains steadfast to ensure this provision is excluded from the budget reconciliation proposal and will continue to engage Congress to advocate against provisions that would further complicate the direct lending process.
Accounts Operations Consumer Lending
Credit Unions, Board of Directors, Web/Tech, Organizational Change, Merger
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