The Consumer Financial Protection Bureau (CFPB) released its final rule on section 1071 of the Dodd-Frank Act Thursday, which would require credit unions to collect and report certain data on applications for credit. CUNA has long maintained that the overly broad scope of the rule will raise the cost of small business borrowing and require burdensome data collection.
The CFPB made several changes from the proposed rule, including increasing the threshold for a covered financial institution to 100 (up from 25), adopting a phased implementation, and removed the visual observation requirement.
“Credit unions fully support efforts to provide all members with fair and equitable financial opportunities, but we believe the size and scope of this rulemaking may have unintended impacts on the small business lending market,” said CUNA President/CEO Jim Nussle. “However, we do appreciate several changes made by the bureau that are intended to ease compliance for the nation’s smallest lenders.”
The final rule requires higher volume lenders to collect and report data earlier than smaller volume lenders:
CUNA’s comments on the proposal noted its concerns with “the potential for unintended consequences and substantial costs of compliance associated with the creation of a broad data collection where one does not currently exist.”
CUNA has supported legislation to change section 1071, and to establish an appropriate compliance timeline for implementation of the rule. CUNA also filed a Freedom of Information Act request on the implementation of the rule.