Evidence of CFPB interest in small business lending continues to mount. While it was not surprising to see federal regulators attending the American Banker’s Marketplace Lending +Investment conference in New York City two weeks ago since many marketplace lenders make consumer loans, the CFPB also had several representatives attend the American Banker’s Small Business Banking conference in Nashville earlier this week. I attended the conference and spoke on class action and regulatory risk in small business lending.
In a surprise address, made possible by a scheduled speaker’s travel difficulties, Dan Sokolov, the CFPB’s Deputy Associate Director for Research, Markets & Regulations, explained the CFPB’s interest in the conference. He indicated that, while the CFPB’s focus is on consumer lending, the Bureau also has some jurisdiction over small business lending, such as the authority to enforce the Equal Credit Opportunity Act (“ECOA”). He discussed the expanded small business lending data collection requirements of Dodd-Frank Section 1071, and indicated that the CFPB is in the process of standing up an interdisciplinary team to implement Section 1071. (Section 1071 amended the ECOA to require financial institutions to collect and maintain certain data in connection with credit applications made by women- or minority-owned businesses and small businesses. Such data include the race, sex, and ethnicity of the principal owners of the business.) Mr. Sokolov indicated that the CFPB was attending the conference for research purposes, to prepare for its work in the small business area.
Mr. Sokolov asked for help in identifying an industry veteran to serve as the Bureau’s “Assistant Director, Small Business Lending,” who will be charged with leading the Section 1071 inter-disciplinary team. He distributed a flyer about the position. Notably, the flyer hints at a broader role for the CFPB in small business lending than its jurisdiction permits. In addition to other responsibilities, the new Assistant Director will “[m]onitor, analyze, and interpret developments in small business loan products”; and he or she will have a “once-in-a-career opportunity to make the market for small business finance fairer and more transparent.”
In August 2015, Ballard Spahr attorneys conducted a webinar: “Pushing the Envelope: Are There Limits to the CFPB’s Jurisdiction?” in which we discussed the CFPB’s continuing “jurisdiction creep” and explored the limits of the CFPB’s jurisdiction.
