Tillis, Colleagues Urge CFPB to Halt Unfair Small Business Data Collection Rule
WASHINGTON, D.C. – Senator Thom Tillis recently joined six Senate Banking Committee Republicans in urging the Biden Administration’s Consumer Financial Protection Bureau (CFPB) to halt the effective date of the Dodd-Frank Section 1071 small business data collection rule for all banks. The rule would require banks to collect sensitive personal data on small business owners when they seek a loan.
Currently, an injunction requested by the CFPB itself applies only to certain lenders, including some of the largest banks in the U.S., and does not cover the majority of small, community banks. This places local banks, which are often central to rural and low-income communities, at a distinct and government-created disadvantage.
The senators wrote, “At your agency's request, a recent ruling in the U.S. District Court has created a situation where only some lenders, including large systemically important lenders, will receive a temporary reprieve from working towards implementation of the CFPB’s Section 1071 small business data collection rule (‘the 1071 rule’), while others, including many community banks and all credit unions, must seek further relief from the judicial system.”
The senators continued, “As you are aware, we harbor deep concerns about the potential adverse impacts of the Consumer Financial Protection Bureau’s (CFPB) rule to implement Dodd-Frank Section 1071. Furthermore, we believe that the CFPB's funding structure is in violation of the Appropriations Clause of the U.S. Constitution. In October 2022, the U.S. Court of Appeals for the Fifth Circuit concurred with this viewpoint, and the Supreme Court will be reviewing this matter in October.”
“In light of these recent developments, we respectfully urge the CFPB to exercise its existing legal authority by issuing a nationwide stay of the effective date of its Section 1071 rule for all credit unions and FDIC-insured banks, including community banks. This action would provide a crucial measure of certainty to small businesses and community banks, which are the cornerstone of the American economy, while we await a final determination of the validity of the Section 1071 rule by the Courts,” the senators concluded.
The full letter is available here.
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