October 26, 2022
SUPERINTENDENT OF FINANCIAL SERVICES ADRIENNE A. HARRIS ISSUES REVISED PROPOSED COMMUNITY REINVESTMENT ACT REGULATION TO IMPROVE LENDING TO MINORITY- & WOMEN-OWNED BUSINESSES
Revised Proposed Regulation Aims to Ensure Regulated Banking Institutions Meet Credit Needs of Minority & Women-Owned Businesses
The Department Seeks Comments on the Updated Proposed Regulation
Superintendent of Financial Services Adrienne A. Harris today announced a revised proposed regulation that will allow the New York State Department of Financial Services (DFS) to collect data to evaluate how well New York-regulated banking institutions are serving minority- and women-owned businesses in their communities, pursuant to an expansion of New York State’s Community Reinvestment Act (CRA). The revised proposed regulation is subject to a 45-day comment period following publication in the State Register.
The revised proposed regulation addresses comments received by DFS during a prior 60-day comment period. The revisions aim to minimize compliance burdens by ensuring the proposed language complements requirements in the Consumer Financial Protection Bureau’s proposed regulations for data collection on credit access for small and minority- and women-owned businesses.
“Banks must meet the needs of all consumers, including minority and women business owners, who historically have been denied fair access to credit,” said Superintendent of Financial Services Adrienne A. Harris. “This revised regulation ensures DFS has the necessary data to verify that banks are providing equitable access to financial products, creating a fairer financial system.”
Among its provisions, the proposed regulation details how institutions must collect and submit the necessary data to DFS while abiding by fair lending laws. Banks will be required to ask whether a business applying for a loan or credit is minority- or women-owned and report to the Department the details of applications, such as the date; type of credit applied for and amount; and whether the application was approved or denied; as well as whether the applicant is a minority-owned business, a women-owned business, or both; the size of the business; and the location of the business.
Revisions to the proposed amendment include:
Establishing how covered banking institutions should solicit, collect, store, and report the information relating to their provision of credit to minority- and women-owned businesses, for example, when requests for information should be made, and notifications to applicants of their right to refuse to offer information in response to such requests and that the information they provide may not be used for any discriminatory purpose;
That to the extent feasible, underwriters should not have access to the information provided by applicants;
The length of time the information gathered must be preserved by the covered institution;
A sample data collection form that covered institutions are permitted (but not required) to use.
A copy of the updated proposed regulation can be found on the DFS website.