CFPB Previously Settled Advocates’ Lawsuit Over Trump Admin’s Unlawful Delay of Rulemaking
Data Collection Critical to Help Small Businesses and Women- and Minority-Owned Businesses Access Credit
Oakland, CA — The Consumer Financial Protection Bureau (CFPB) has agreed to a court-ordered deadline for the agency to propose a rule implementing Section 1071 of the Dodd-Frank Act, which requires the CFPB to collect and disclose data on lending to small businesses and women- and minority-owned businesses.
The CFPB agreed to a September 30, 2021 deadline as part of a settlement agreement reached in response to a lawsuit brought by the California Reinvestment Coalition (CRC), the National Association for Latino Community Asset Builders (NALCAB), and small business owners in Iowa and Oregon. That settlement was a milestone victory for addressing the credit barriers small business owners face across the country—particularly women and entrepreneurs of color. On Friday, a federal court approved the September 30 deadline as the next step in the rulemaking process.
Existing data on lending by financial institutions to small businesses and women- and minority-owned businesses is inadequate. The lack of data frustrates the ability of small businesses and organizations to detect and address obstacles they face in obtaining credit.
“We’re pleased to see that CFPB is finally moving forward with this rule. However, that joy is tempered by the suffering many Black, Indigenous, and People of Color-run small businesses have had to endure during the pandemic,” said CRC Executive Director Paulina Gonzalez-Brito (they/them). “It is already challenging for Black, Indigenous, and People of Color- and women-run businesses to get the resources and lending opportunities they need to build wealth and support their families. The pandemic made it nearly impossible, as BIPOC-owned small businesses received the least amount of PPP loans. Implementing 1071 will go a long way toward protecting small business owners and creating lending opportunities for BIPOC and women-led small business owners.”
“Latino small businesses play a vital role in our economy but continue to face challenges in accessing the capital needed to fully reach their potential, spur economic growth and create jobs,” said Marla Bilonick, President and CEO of NALCAB. “Implementation of Section 1071 will increase transparency, foster enforcement of fair lending laws, and provide the data needed to increase opportunities for women-owned, minority-owned, and small businesses.”
“We’re proud of our work with CRC and NALCAB to ensure that this critical data is collected and shared,” said Democracy Forward Managing Senior Counsel Jeffrey Dubner. “The Trump administration broke the law when it delayed this critical rulemaking and turned its back on women, minority, and small-business owners. We are happy to see that the CFPB’s current leadership has affirmed its commitment to advancing this critical and overdue rulemaking.”
Section 1071 of Dodd-Frank was designed by Congress to facilitate enforcement of fair lending laws in order to curb lending discrimination and take aim at “credit deserts” where businesses are unable to obtain the credit they need to grow and serve their communities. Congress mandated that the CFPB issue rules to implement this data collection.
But the Trump administration unlawfully blocked progress. In 2018, without any explanation, then-acting CFPB Director Mick Mulvaney suspended the rulemaking process required by law. Democracy Forward and Hagens Berman Sobol Shapiro LLP filed suit on behalf of CRC, NALCAB, and small business owners from Waterloo, Iowa and Portland, Oregon in May 2019. In February 2020, the CFPB settled with the plaintiffs. As part of the settlement, CFPB agreed to set enforceable deadlines for key steps of the rulemaking, leading to the September deadline. Learn more about the lawsuit and why the settlement was a milestone victory for one small business owner in Iowa.
Democracy Forward is a nonprofit legal organization founded in 2017 to litigate challenges to unlawful executive branch action on behalf of organizations, individuals, and municipalities. The organization has taken 650 legal actions and reversed dozens of harmful policies. Democracy Forward is expanding its work, building on its success to confront unlawful threats to democracy and social progress.
The California Reinvestment Coalition (CRC) is the largest statewide community reinvestment coalition in the country, with over 300 member organizations across California that provide services to tens of thousands of low-income residents. CRC members include affordable housing developers, community development financial institutions, housing counseling agencies, small business technical assistance providers, legal services agencies, and community-based organizations.
The National Association for Latino Community Asset Builders (NALCAB) is the hub of a national network of more than 130 member organizations that are anchor institutions in geographically and ethnically diverse Latino communities in 40 states, Washington DC and Puerto Rico. NALCAB supports our member institutions through funding, training, research and advocacy, enabling them to invest in their communities by building affordable housing, ensuring equitable neighborhood development, supporting small business growth, and providing financial counseling on issues including credit building and homeownership. As a grantmaker and US Treasury certified CDFI lender with offices in San Antonio and Washington DC, the NALCAB Network serves hundreds of thousands of low- and moderate-income people, advancing economic equity and inclusivity in the communities we serve.
NALCAB Associate Director of Communications