January 6, 2022
Consumer Financial Protection Bureau
1700 G Street N.W.
Washington, DC 20552
Docket No. CFPB-2021-0015 / RIN 3170-AA09
Small Business Lending Data Collection under the Equal Credit Opportunity Act
Dear Director Chopra:
I write as Acting Superintendent of the New York State Department of Financial Services (“NYDFS”) in response to the Bureau of Consumer Financial Protection’s (“CFPB”) Notice of Proposed Rulemaking (“NPRM”), titled Small Business Lending Data Collection under the Equal Credit Opportunity Act, which proposes regulations to implement the data collection requirements of Section 1071 of the Dodd-Frank Act.
The NYDFS is responsible for the overall supervision, regulation, and enforcement of laws regarding financial services companies in the State of New York, including New York state-chartered banking institutions and other lenders who will be affected by the NPRM. Pursuant to those responsibilities, the NYDFS examines state-chartered banking institutions for compliance with the New York Community Reinvestment Act (“NYCRA”), New York Banking Law § 28-b, which largely mirrors the current federal Community Reinvestment Act (“CRA”). In addition, the NYDFS conducts consumer compliance and fair lending examinations of regulated institutions. The NYDFS therefore has extensive experience with evaluating entities’ fair lending practices and shares the CFPB’s goal of collecting critical information about minority- and women-owned businesses (“MWOBs”) to address fair lending concerns and allow financial institutions to identify gaps in the market.
The NYDFS is in the process of implementing its own MWOB data collection regulation. In 2019, the NYCRA was amended to require the NYDFS to review banking institutions’ lending and technical assistance programs to MWOBs as part of NYCRA evaluations. Because banking institutions typically do not collect this type of data, and there is no existing comprehensive database of MWOB lending data in New York State, the NYDFS has proposed a regulation which would require banking institutions to begin collecting MWOB-related data.
There are some similarities between the NYDFS proposed NYCRA regulation, which only applies to New York State-chartered banking institutions, and the NPRM. To avoid imposing an undue burden on institutions covered by both regulations, the proposed NYCRA regulation would permit, but not obligate, the NYDFS to treat compliance with the CFPB’s rule implementing Section 1071 as compliance with the NYCRA’s MWOB-related data collection regulation. The NYDFS therefore has a particular interest in achieving alignment between the NYDFS and the CFPB regulations in this area.
Below we provide NYDFS’s specific input with respect to two issues raised in the CFPB’s NPRM.
The NPRM proposes to make data submitted by financial institutions public subject to modifications or deletions to protect privacy interests.1 However, the NPRM is silent as to whether the CFPB will share the more detailed data with state regulators, even if withheld from the public. The NYDFS urges the CFPB to consider including in its regulation express language that the CFPB may share all data submitted by financial institutions with state regulators in accordance with information sharing agreements between the CFPB and the state regulators. That data will assist state regulators with identifying fair lending violations and enforcing anti-discrimination laws.
The NPRM proposes to require data collection only for smaller MWOBs, i.e., those with $5 million or less in gross annual revenue for the preceding fiscal year.2
The NYDFS respectfully requests that the CFPB reconsider this proposed approach. As set forth above, the NYDFS aspires to be able to consider compliance with this regulation to be compliance with the NYDFS’ MWOB-related data collection regulation. However, if the CFPB only requires data collection for small MWOBs, whereas the NYDFS statute requires evaluation of MWOB lending without respect to size, there will be a dissimilarity in data collected by lenders for submission to the CFPB and the NYDFS. This dissimilarity, in turn, may prevent the NYDFS from deeming compliance with the CFPB regulation sufficient to comply with the NYDFS regulation.
More broadly, for the purposes of fair lending enforcement, collection of lending data regarding large MWOBs is just as important as the collection of small business data. It is not clear to the NYDFS the extent to which large MWOBs are treated differently by lenders from other large businesses. Accordingly, NYDFS requests that the CFPB’s rule capture and report that information.
The NYDFS enthusiastically supports the CFPB’s efforts to collect data on small business lending. This data will become an invaluable resource for government regulators, community organizations, academics, and other institutions and individuals who seek to promote and enforce fair lending laws, and enhance community development. We believe that the changes we have recommended regarding information sharing with state regulators, and widening the pool of information collection to all MWOBs, will strengthen the utility of the regulation and lead to better consistency with other states pursuing similar information collection requirements.
Adrienne A. Harris
Acting Superintendent of Financial Services
1 86 Fed. Reg. 56356, 56425-34.
2 86 Fed. Reg. 56356, 56384-86.