Bill would establish ‘appropriate compliance timeline’ for section 1071

CUNA wrote in support of legislation to establish an “appropriate” compliance timeline for the Consumer Financial Protection Bureau’s (CFPB) section 1071 rulemaking, Rep. French Hill's, R-Ark., Small Lenders Exempt from New Data and Excessive Reporting (LENDER) Act. 

Section 1071 requires financial institutions to compile, maintain, and submit to the CFPB certain data on applications for credit for women-owned, minority-owned, and small businesses.

CUNA notes that credit unions support the goals of section 1071 but have concerns with the 1071 rulemaking.

“There is widespread concern that Section 1071’s complexity and significant costs will weigh disproportionately on credit unions in ways that ultimately lead to fewer and less favorable outcomes for all small business borrowers,” the letter reads. “The overly broad scope of the CFPB’s proposed rule will substantially raise the cost of small business borrowing and require covered financial institutions to collect data on businesses that are not ‘small businesses’ by any traditional metric.

“Section 1071 should be appropriately tailored to ensure the health and financial needs of truly small businesses can continue to be met,” it adds.

“Cornerstone League supports the Small LENDER Act by Rep. French Hill which focuses on the implementation period for Section 1071 of Dodd-Frank," said Jim Phelps, Cornerstone League executive vice president, chief advocacy officer. "This bill will mitigate the compliance burden for credit unions and other community-based financial institutions. Rep. Hill has been a staunch advocate for reining in excessive regulations, and we appreciate his ongoing support.”  

CUNA also notes the 18-month mandatory compliance schedule proposed by CFPB would be “aggressive even for the largest, most technologically savvy credit unions.”

CUNA filed a Freedom of Information Act request with the CFPB on its implementation of section 1071, and supported legislation in the last Congress to replace the language in section 1071.