#2023-7, March 31, 2023

CFPB Finalizes Rule to Create New Data Set for Small Business Lending

Yesterday, the Consumer Financial Protection Bureau (CFPB) finalized its rule to create a small business lending data set that will purportedly increase transparency in lending, promote economic development, and combat discrimination.  In 2010, Congress enacted requirements that would result in lenders making data available to the public about their small business lending activity in Section 1071 of the Consumer Financial Protection Act.  The CFPB did not issue these rules until a 2019 court order required the agency to finalize the rule by March 31, 2023.

While the Association is still processing the full regulatory text, we can report that the final rule plans for implementation in the following ways:

• Phased in implementation, with largest lenders required to report earlier than small or relationship-based local lenders.  Lenders that originate at least 2,500 small business loans annually must begin collecting data on October 1, 2024.  Lenders that originate at least 500 loans annually must begin collect data starting April 1, 2025.  Lenders originating at least 100 loans must begin to collect this data by January 1, 2026.

• Reducing the potential for duplicative reporting for Home Mortgage Disclosure Act (HMDA) and Section 1071 lending data, as loans reported within a bank's HMDA filing will not need to be reported under the small business lending data set.

• Allowing for the use of digital tools developed by industry and technology partners to aid in the collection and reporting of small business lending data.

Finally, in its initial press release, the CFPB announced its intention to issue a supplementary proposal that would provide additional implementation time for small lenders that have demonstrated high levels of success in serving their local communities, which is more typically determined in frameworks such as the Community Reinvestment Act (CRA).

To read the Final Rule, please click here. To read the Executive Summary, please click here.

MBA Goes to Washington DC for ABA’s Washington Summit and Capitol Visits

Just last week, MBA staff, including President & CEO Kathleen Murphy, walked Capitol Hill with a group of dedicated members for timely meetings in Washington DC.  The Association’s schedule consisted of meetings with staff from Senator Ed Markey’s and Senator Elizabeth Warren’s offices as well as Democratic Whip Kathleen Clark’s and Representative Jake Auchincloss’.  These critical visitations to Capitol Hill were coordinated concurrently with the American Bankers Association’s Washington Summit conference.

The member banks participating in the coordinated trip to Capitol Hill represented banks that varied in size, charter, and geography.  Members were forthright and thoughtful in their discussions and delivered a unified and calming message that appeared to be well received by congressional staff.

Key points in the Association’s advocacy messaging included:

• Despite recent press and social media accounts, the Massachusetts banking system is safe, resilient, and sound.

• Massachusetts banks are well capitalized, highly liquid, and remarkably diverse in size, geography, and business model unlike others more recently in the news.

• In the past several weeks we have seen banks of all sizes do what they do best: support their customers, their communities, and each other.

• Every member of MBA is vitally important to the Massachusetts financial environment, and we will continue to advocate for policies that support banks of all sizes so they can continue the great work they do on behalf of their customers and communities.

Our members’ accounts gave our delegation’s offices the opportunity to see how responsive and responsible our banks are in critical moments.  It also reassured them that MBA, and the larger Massachusetts banking community, is a resource they can continue to count on.

MBA Hosts FedNow Workshop with Federal Reserve Bank and Core Providers

On Wednesday, March 29th, the Association hosted a first-of-its-kind member conference with the Federal Reserve Banks of Boston, Chicago, and New York as well as core processors COCC, Fiserv, and Jack Henry.  Allison Baller, VP FedNow Industry Readiness, provided the opening keynote on FedNow, instant payments, and the potential use cases the Federal Reserve and pilot banks worked through during the development phase.  The workshop concluded with breakout sessions with the core processors, as well as a panel discussion featuring member banks and Ms. Baller.

As stated previously, FedNow will launch in July, and a certification process is expected to begin in the month of April.  The certification process will ensure that early adopters complete a robust testing program to ensure their readiness for implementation, as well as provide an assessment on network experience ahead of the go-live date.

To engage with FedNow Services and start exploring the resources available to the banking industry, please click here.