TRALA Pushes Data Collection Mandate Repeal With Obama Administration
TRALA and its Industry Council led an industry coalition meeting with the Office of Advocacy within the Small Business Administration today to push for repeal of an onerous data collection mandate. The mandate was passed in 2010 as part of theWall Street ReformandConsumer Protection Actin response to the financial crisis in the banking community.
Within that enormous bill, there is an amendment - Section 1071 - that was added regarding the collection of data for commercial loans termed the Small Business Data Collection provision. This amendment adds extensive new business credit applicant data collection requirements to the Equal Credit Opportunity Act (ECOA) and creates an enormous administrative burden for commercial lenders. This provision would require financial companies (defined as anyone that gives credit under an application process) to collect personal data - such as race, gender and the size of the company seeking credit - from prospective borrowers and process, file, store, and report that information separately to the government and keep available to the public on an annual basis.
While that new law includes a July 21, 2011 effective date, the law itself repeatedly refers to requirements in regulations, rules, orders and guidance yet to be issued by the yet to be created Consumer Financial Protection Bureau (CFPB). This new sweeping data collection mandate will likely have an adverse effect on access to credit and will impose a costly administrative burden on financial institutions. It also directly conflicts with existing anti-discrimination laws.
By allowing the CFPB to have jurisdiction over commercial loan application processes, the law seems to miss the point of why the CFPB was created - to ensure consumer protection over lending practices - and not to oversee commercial loan activity. While TRALA and others are very opposed to having many of these new requirements levied against them, the timing of such requirements is also troubling. If not changed, this provision will take effect on July 21, 2011 even though that is the same day that the CFPB will officially begin its functions. At the meeting with the Small Business Administration, TRALA pointed out that since there are so many misconceptions and questions that have not been addressed, compliance would be uncertain.
TRALA has begun the process of reaching out to key staff in Congress as well as to ask for a meeting with the U.S. Treasury. Through its Industry Council, TRALA will continue to lead this effort to remedy this situation in the next few months.
If you have any questions about this issue or would like to participate in meetings in Washington, DC, please contact Jake Jacoby at email@example.com or at 703-299-9120.