Proposed ECIP data collection harms ‘far outweigh’ potential benefits

CUNA has deep concerns with certain provisions in the proposed Quarterly Supplemental Report (QSR), which would require credit unions that received Emergency Capital Investment Program (ECIP) awards to collect store, and report racial and ethnic demographic information on every loan and report without use of proxies.

CUNA applauds the ECIP—which was created in 2021—but notes there has been no guidance from Treasury or other regulators on how to establish and implement the required processes.

“CUNA welcomes Treasury’s efforts to assess the success of the ECIP through reporting, however, if the QSR is finalized as proposed, the burden and risks posed to ECIP-awardee credit unions far outweighs the benefits of the data sought by Treasury and, for some, the benefits of the ECIP award itself,” the letter reads. “CUNA urges Treasury in the strongest possible terms to not finalize a requirement for ECIP-awardee credit unions to implement the collection, storage, and reporting of actual demographic data on all loans.”

CUNA adds that this information was nor shared with credit unions in the application, initial reporting, or agreement involving ECIP funds, and notes the numerous litigation, compliance, operational, and reputational risks associated with implementing processes to collect he data.

“ECIP-awardee credit unions simply should not be asked to formulate the processes and procedures for a massive new data collection requirement with no guidance from their examiners or rulemaking  authorities, to bear the cost of designing these systems alone, to do so under an expedited timeline, and to be told they have no choice because they unknowingly agreed to it when they accepted ECIP funds,” the letter reads.

Highlights include:

• The statutory language is insufficient to eliminate all fair lending risk regarding the collection of demographic data, particularly protection from the Equal Credit Opportunity Act’s private right of action.
• Treasury must work with the CFPB and NCUA to establish a framework prior to implementing a requirement to collect demographic data, which should include a full rulemaking process.
• The requirement to collect demographic data on all loans will harm member trust in ECIP-awardee credit unions.
• The requirement to obtain demographic data may have significant implications for the cost of credit for ECIP-awardee credit union members.
• The timeline for implementation of demographic data requirements is not reasonable, as the procedures must be established by July 1, 2024. This is 15 months, compared with the 26 months allotted for the Home Mortgage Disclosure Act. The shortest CFPB rulemaking implementation period has been 18 months.
• Treasury should make the collection of data on non-HMDA loans voluntary.