/>iOn April 30, the CFPB announced it will deprioritize enforcement and supervision of its small business lending data collection rule for institutions not covered by the stay issued by the U.S. Court of Appeals for the Fifth Circuit. The rule, finalized in May 2023 under Regulation B, implements Section 1071 of the Dodd-Frank Act and requires lenders to collect and report demographic and loan application data from small business credit applicants.
Under the rule, covered financial institutions must collect and report application-level data, including loan purpose, amount, pricing, business size, industry classification, and ownership demographics. Certain demographic data must be firewalled from credit decisionmakers, and financial institutions are prohibited from disclosing protected information except as required by law.
The Bureau stated that staying the enforcement against institutions outside the Fifth Circuit—while others remain shielded—would create inconsistent and inequitable regulatory treatment. The Bureau also cited that it will keep its focus and resources on “more pressing threats to consumers,” particularly those affecting servicemen, veterans, and small businesses.
Putting It Into Practice: The CFPB’s decision to deprioritize its small business lending data collection rule is the latest move in a recent push to scale back the previous administration’s priorities (previously discussed here and here). The stay effectively pauses enforcement for entities outside of the stay’s reach. We will be sure to provide updates as litigation regarding the rule continues.
