Banking and Finance Law Daily In action against CFPB, court approves agreed small business lending NPRM deadline
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Monday, July 19, 2021

In action against CFPB, court approves agreed small business lending NPRM deadline

By Thomas G. Wolfe, J.D.

The court’s order sets Sept. 30, 2021, as "an appropriate deadline" for issuance of the Bureau’s notice of proposed rulemaking to adopt ECOA regulations governing the collection of small business lending data.

In keeping with a 2020 settlement agreement and a July 16, 2021, stipulation between a coalition of plaintiff small business owners and community development organizations and the defendant Consumer Financial Protection Bureau, the federal district court in Oakland, California has entered an order approving Sept. 30, 2021, as "an appropriate deadline" for the CFPB to issue a Notice of Proposed Rulemaking (NPRM) to adopt Equal Credit Opportunity Act regulations governing the collection of data about small business lenders—including women- and minority-owned businesses. Further, the July 16, 2021, order calls for the court to retain jurisdiction over the Bureau’s rulemaking to implement Section 1071 of the Dodd-Frank Act, to oversee compliance with the parties’ agreement, and to "resolve any disputes or motions for extensions or to modify such terms that may arise therefrom" (California Reinvestment Coalition v. Uejio, Case No. 4:19-cv-02572-JSW).

Section 1071 of the Dodd-Frank Act amended the Equal Credit Opportunity Act to require financial institutions to compile, maintain, and submit to the CFPB certain data on applications for credit for small businesses, including businesses owned by women and minorities.

Backdrop. In May 2019, the California Reinvestment Coalition (CRC), National Association for Latino Community Asset Builders (NALCAB), and certain individuals (Deborah Lynn Field and Reshonda Young) initiated their lawsuit against the CFPB, alleging that the agency violated the Administrative Procedure Act because the Dodd-Frank Act requires the CFPB to collect and publish data on lending to women-owned, minority-owned, and other small businesses. Notably, while Section 1071 of the Dodd Frank Act requires the CFPB to collect data that would help identify instances of discrimination against small business lenders, the Bureau halted its rulemaking in 2018 and has not moved forward on it since that time. The plaintiff small business owners and community development organizations claimed that the CFPB has unreasonably delayed setting forth rules and regulations to implement Section 1071 of the Dodd Frank Act.

In February 2020, the Oakland federal trial court approved a settlement between the parties in the case. As part of that settlement, the CFPB committed to: outline its proposals for collecting the required ECOA small business lending data and to publicly release those proposals for consideration; establish a Small Business Advocacy Review Panel to provide input on its proposal; take into account the panelists’ suggestions from the small business plaintiff groups; negotiate deadlines with the plaintiffs for each stage of the rulemaking process to facilitate the data collection; accept court-ordered deadlines if the parties cannot agree; and submit status reports every 90 days detailing the CFPB’s progress toward implementing the data-collection rule (see Banking and Finance Law Daily, Feb. 27, 2020).

In keeping with the settlement agreement, in September 2020, the CFPB officially published guidance for the mandated Small Business Advocacy Review Panel (see Banking and Finance Law Daily, Sept. 16, 2020). Similarly, in May 2021, the Bureau filed its "Fifth Status Report" with the court in connection with detailing its "progress with respect to promulgating regulations to implement Section 1071 of the Dodd-Frank Act."

Attorneys: Jeffrey B. Dubner (Democracy Forward Foundation) for California Reinvestment Coalition, National Association for Latino Community Asset Builder, Deborah Lynn Field, and Reshonda Young. Christopher J. Deal and Lawrence DeMille-Wagman for David Uejio and the Consumer Financial Protection Bureau.

Companies: California Reinvestment Coalition; National Association for Latino Community Asset Builders; National Community Reinvestment Coalition

MainStory: TopStory CFPB CommunityDevelopment DoddFrankAct EqualCreditOpportunity GCNNews Loans

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