Dear Community Banker,
ICBA’s years-long effort to address the harmful impact of the Consumer Financial Protection Bureau’s Section 1071 data collection and reporting requirements took a positive step today, though our fight is far from over.
In the CFPB’s updated 1071 proposed rule issued today, the bureau heeded several policy changes long advocated by ICBA. For instance, the Trump administration’s new proposal to implement 1071 requirements would:
- Exempt financial institutions that originate fewer than 1,000 covered small-business loans per year—up from the bureau’s previous 100-loan threshold, exempting a vast number of community banks.
- Exempt more small-business loans by defining small businesses as having gross annual revenues of $1 million or less, a much tighter standard than the previous $5 million threshold.
- Dramatically reduce the data points that covered banks would be required to collect.
These proposed updates clearly align with policy changes that ICBA and community bankers have long advocated to mitigate the impact of 1071 on small-business lending. But as I noted in a national news release today, one key ICBA recommendation is not included in the proposal: fully exempting all community banks under $10 billion in assets.
With today’s proposal including a troubling exemption for Farm Credit System lenders, a substantial community bank exemption is essential. There is no credible rationale for providing favorable treatment to FCS lenders competing against rural community banks for the same customers. FCS lenders should not have competitive and regulatory advantages over rural community banks.
Further updates to the proposal are needed to ensure the 1071 rule does not hamper the ability of community banks to meet the needs of local small businesses. Nevertheless, while ICBA continues to review this proposal, our years of advocacy on this issue are undoubtedly paying off with the CFPB. Meanwhile, we continue working with lawmakers to advance legislation to address the underlying Section 1071 statute after the last Congress passed a resolution to overturn the rule that was later vetoed.
In the days and weeks ahead, we will provide you with a detailed analysis of the proposed rule, along with a grassroots guide to help you weigh in and make your voice heard.
Thank you for all your hard work in achieving meaningful change in Washington. Let’s continue our efforts to ensure the misguided 1071 policy does not harm the small businesses and local communities that depend on you.
Sincerely,
Rebeca Romero Rainey
ICBA President and CEO
