AFSA Submits 1071 Letter to House Committee
Yesterday, the House Small Business Subcommittee on Economic Growth, Tax, and Capital Access held a hearing to consider the Consumer Financial Protection Bureau’s (CFPB) rulemaking on Section 1071 of the Dodd-Frank Act. The rule will require financial institutions to collect, report, and retain certain data points on loan applications by small businesses.
AFSA sent a letter to Chairman Roger Williams (R-TX) ahead of the hearing to highlight the concerns with vehicle finance companies’ ability to comply with the CFPB’s rule. To comply with a Section 1071 rulemaking, indirect auto finance companies and banks will need auto dealers to collect information about an applicant’s race, color, religion, national origin, or sex. However, auto dealers are prohibited from gathering that information by Regulation B and the Federal Reserve’s 2011 rule. The letter requests Congress to weigh in with the CFPB in order to ensure vehicle finance companies are not placed in a position where they would be unable to comply.
During the hearing, Republicans generally sought to cast the rule’s new data collection and reporting requirements as overly costly and burdensome for small lenders and, in the case of racial and ethnic data reporting, potentially also discriminatory. In contrast, Democrats and their witness — Ms. Luz Urrutia of the Accion Opportunity Fund — argued that the data is necessary to ensure fair lending practices, particularly for women- and minority-owned businesses, and would not unduly hamper lenders.
March 29th, 2023
