Latest Update February 26, 2020

CFPB AGREES IN SETTLEMENT TO IMPLEMENT FAIR LENDING DATA DISCLOSURE LAW

In response to our lawsuit, the Consumer Financial Protection Bureau agreed to stop flouting the law and commit to finalizing data collection rules to protect small, women-owned, and minority-owned businesses from discriminatory lending practices. This information is critical for enforcing fair lending laws as well as identifying and remedying barriers small businesses face in accessing credit. The agency must now meet court-ordered deadlines for issuing the rules and provide mandatory status reports updating the public on its progress.

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The Trump administration is defying the Dodd-Frank Act by failing to collect and disclose data on lending to women-owned, minority-owned and small businesses. Dodd-Frank requires the Consumer Financial Protection Bureau to collect this data from financial institutions and make it publicly available to facilitate enforcement of fair lending laws to curb lending discrimination. Congress further mandated that the CFPB issue rules to implement this data collection. Yet, in 2018, without any explanation, then-Acting Director Mick Mulvaney unlawfully halted the required rulemaking process and Director Kathy Kraninger has taken no meaningful steps to remedy this failure.

The lack of data frustrates the ability of small businesses and organizations like CRC to detect and address obstacles women-owned, minority-owned and small businesses face to obtaining credit. The CFPB has acknowledged that current data is inadequate to fully understand, let alone remedy, the extent to which discriminatory lending creates credit deserts for small businesses and businesses owned by women and minorities. Section 1071 of Dodd-Frank was designed to fill this gap by requiring financial insitutitions to maintain and disclose data about their actions on loan applications by women-owned, minority-owned and small businesses.

By failing to implement Section 1071 of the Dodd-Frank Act, CFPB has unlawfully withheld and unreasonably delayed agency action, violating the Administrative Procedure Act, so we took CFPB to court on behalf of the California Reinvestment Coalition. If this data were available, CRC and its members would be better able to identify and address gaps in credit access for communities that historically have been disadvantaged in lending. Since our initial filing, Oregon and Iowa small business owners, alongside the National Association for Latino Community Asset Builders, joined our suit. In our motion for summary judgment, we show how ReShonda Young, Deborah Field, and our nonprofit plaintiffs are each harmed by CFPB’s failure.

On February 26, 2020, we secured a milestone victory by getting court approval of a settlement that requires CFPB to: 

  • Outline proposals for collecting the required Section 1071 data and publicly release those proposals for consideration of their effect on small businesses by September 15, 2020.
  • Convene a Small Business Advocacy Review panel to provide input on its proposal by October 15, 2020. CFPB will take panelist suggestions from the small business plaintiff groups.
  • Negotiate deadlines for each stage of the rulemaking process to facilitate the data collection.
  • Submit status reports every 90 days detailing the CFPB’s progress toward implementing this data collection law.

Jeffrey Dubner

Managing Senior Counsel

Challenging unlawful executive branch actions through a wide range of legal strategies

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