September 13, 2017

NAFCU urges against small-biz data reporting for CUs

NAFCU yesterday urged the CFPB to exempt credit unions, which are subject to strict limits regarding member business lending, from any future rulemaking that would compel lenders to disclose small-business loan information.

"Credit unions serve distinct fields of membership, and as a result, institution-level data related to women-owned, minority-owned, and small business lending may appear skewed in relation to other lenders," NAFCU Regulatory Affairs Counsel Andrew Morris wrote in an official comment letter.

Morris urged that if an industry-wide exemption is not possible, the CFPB should coordinate with NCUA and the Treasury Department to ensure that future efforts to implement small-business-loan data reporting accommodate the unique structure and purpose of credit unions.

The CFPB has issued a request for information as it considers how to implement Section 1071 of the Dodd-Frank Act, which could lead to data collection and reporting on lending to small businesses similar to the type required under the Home Mortgage Disclosure Act.

Section 1071 seeks to facilitate enforcement of fair lending laws help users of the data better identify the needs of women-owned, minority-owned and small businesses.

Overall, "NAFCU firmly believes that adoption of tailored exemptions will spare financial institutions significant compliance costs and ensure that the pursuit of business lending data does not result in reduced access to credit, misunderstanding, or disclosure of private borrower information," Morris wrote.

He also said that any future rulemaking under section 1071 applied to credit unions should include a commercial loan-volume threshold to alleviate regulatory burden; define "small business" as a business having $1 million or less in gross annual revenue; consider including transactional limits for applicability such as those used in HMDA.