The Consumer Financial Protection Bureau issued an updated 1071 proposed rule that would exempt more community banks and small-business loans, as advocated by ICBA.
Expanded Exemptions: The CFPB’s new proposed rule to implement 1071 requirements would:
Exempt financial institutions that originate fewer than 1,000 covered small-business loans per year—up from the bureau’s previous 100-loan threshold.
Exempt more small-business loans by defining small businesses as having gross annual revenues of $1 million or less, down from the previous $5 million threshold.
Dramatically reduce the data points that covered banks would be required to collect.
ICBA News Release: In a national news release following the announcement, ICBA commended the administration for making needed improvements via the new 1071 proposal, continued its call for the CFPB to fully exempt all community banks under $10 billion in assets, and noted its ongoing support for legislation to address the underlying 1071 statute.
Ongoing Advocacy Needed: In a message to community bankers, ICBA President and CEO Rebeca Romero Rainey said the proposed updates clearly align with ICBA-advocated policy changes, though ongoing advocacy is needed to advance a community bank exemption, which is essential given the proposal’s troubling exemption for Farm Credit System lenders. “FCS lenders should not have competitive and regulatory advantages over rural community banks,” she said.
ICBA-Supported Bills: ICBA continues calling on Congress to advance:
The 1071 Repeal to Protect Small Business Lending Act (H.R. 976/S. 557), which would repeal the statute that underlies the CFPB rule.
The Small LENDER Act (H.R. 941) and PROTECTED Act (S. 2352), which would mitigate the adverse impact of the rule on small businesses and community banks.
Background on 1071: Section 1071 of the Dodd-Frank Act requires lenders to collect and report data on credit applicants, including the race, sex, and ethnicity of the principal owners as well as gross annual revenue. The CFPB’s 2023 rule and its implementation deadlines remain on hold for ICBA community banks amid ongoing litigation and the new rulemaking.
Key ICBA Priority: Advancing needed reforms to 1071 requirements to support community banks and the small businesses and local consumers they serve is a key part of ICBA’s “Repair, Reform, and Thrive” plan and open letter to the 119th Congress. ICBA will provide members with a detailed summary and grassroots material in the days to come.
