CFPB Unlawfully Halted Progress Toward Collecting Data on Small Business Lending
While Groups’ Lawsuit Forced Administration to Say it Will Move Forward, the Unreasonable and Unlawful Delay Harms Small Business Owners
Ahead of Small Business Saturday, Business Owners Demand Assurances, Arguing Near-Decade Delay is Long Enough
Washington, D.C.—Today, ahead of Small Business Saturday, a coalition of small business owners and community development groups opposed the Trump administration’s attempt to shut down their lawsuit against the Consumer Financial Protection Bureau for unlawfully delaying the implementation of Section 1071 of the Dodd-Frank Act, which requires the agency to collect and disclose data from financial institutions on small business lending practices. Studies show that small businesses—and women-and minority-owned firms in particular—face significant obstacles to obtaining credit. The stalled data collection is critical for enforcing fair lending laws as well as identifying and addressing the barriers small businesses face in accessing credit. The new legal filing was submitted by Democracy Forward on behalf of two small business owners from Waterloo, Iowa and Portland, Oregon; the National Association for Latino Community Asset Builders (NALCAB); and the California Reinvestment Coalition (CRC).
Eight years after the CFPB began “gathering information from stakeholders to better understand the relevant business lending markets, and to determine what data are available and how best to collect those data,” the Trump administration, in 2018, unlawfully halted this progress. In recent court submissions, the CFPB stated it has “many other pressing obligations” besides addressing the discrimination faced by small business owners across the country, and asked a federal court to allow it to continue to delay the legally required data collection for an additional three years.
While the country celebrates Small Business Saturday on November 30, 2019, the administration is proposing to continue to put off the data collection until 2022 or later and refuses to commit to a concrete timeline. Meanwhile, the widespread, discriminatory lending against small, women-owned, and minority-owned businesses continues.
“The administration continues to show America’s small business owners that it has no interest in protecting them from discrimination by financial institutions,” said Democracy Forward Senior Counsel Nitin Shah. “The nearly decade-long delay in collecting this critical data is unlawful, unnecessary, and causing significant harm to the small business owners that fuel our economy.”
“It’s ridiculous that it’s taking this long to implement an important rule that helps identify discriminatory lending to California’s small business owners. Without collecting this lending data, we can’t protect them and proceed to build lending opportunities for all of our communities,” said California Reinvestment Coalition Executive Director Paulina Gonzalez-Brito. “We know how challenging it is already for people of color and women-run businesses to get the resources and lending opportunities they need to build wealth and support their families already. It’s high time for the Bureau to move forward with this rule.”
The plaintiffs opposition to the government’s motion for summary judgment was filed on November 26, 2019, in the United States District Court for the Northern District of California.
The California Reinvestment Coalition builds an inclusive and fair economy that meets the needs of communities of color and low-income communities by ensuring that banks and other corporations invest and conduct business in our communities in a just and equitable manner. We envision a future in which people of color and low-income people live and participate fully and equally in financially healthy and stable communities without fear of displacement, and have the tools necessary to build household and community wealth.
NALCAB – National Association for Latino Community Asset Builders represents and serves a geographically and ethnically diverse group of more than 100 non-profit community development and asset-building organizations that are anchor institutions in our nation’s Latino communities.
Democracy Forward is a nonprofit legal organization that scrutinizes Executive Branch activity across policy areas, represents clients in litigation to challenge unlawful actions, and educates the public when the White House or federal agencies break the law.