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Led by Rep. Donald Payne Jr. (D-NJ) and Rep. Chris Van Hollen (D-MD), 82 House Democrats wrote a letter urging CFPB Director Richard Cordray to restructure the collection of small business lending data in order to help lending institutions better understand the financial needs of these businesses. The letter comes less than two months after Senate Democrats penned correspondence to Cordray asking for the same thing.
The rulemaking that House and Senate Democrats are calling for the CFPB to implement is Regulation B of Section 1071 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. This regulation would make it mandatory for financial institutions to collect and disclose data on lending to small minority- and women-owned businesses. The rule articulates,
“‘INFORMATION GATHERING.—Subject to the requirements of this section, in the case of any application to a financial institution for credit for women-owned, minority-owned, or small business, the financial institution shall—
‘(1) inquire whether the business is a women-owned, minority-owned, or small business, without regard to whether such application is received in person, by mail, by telephone, by electronic mail or other form of electronic transmission, or by any other means, and whether or not such application is in response to a solicitation by the financial institution; and
‘(2) maintain a record of the responses to such inquiry, separate from the application and accompanying information.’”
If enforced, Regulation B has the potential to promote the success of countless small businesses. The rule would force lending institutions to address the problems of underserved minority- and women-owned businesses and could significantly improve the data collection process regarding the lending opportunities they have.