Vaishali Rao Discusses CFPB's Proposed New Data Collection Regime for Small Business Lenders
Hinshaw attorney Vaishali Rao was quoted in Law360 in a report about the Consumer Financial Protection Bureau's (CFPB) proposed new rulemaking that would require a wide range of financial institutions to provide demographic, pricing and other information on credit they provide to small businesses.
Rao flagged the CFPB's proposed adoption of a data collection template - on race, ethnicity, and sex of applicants – that is based on the Home Mortgage Disclosure Act. She questioned how worthwhile this fill-in-the-blank requirement will be at a time when more small business lending is moving online, where there is far less face-to-face interaction between financial institutions and their customers. In those cases, the proposal would allow a lender to leave missing owner demographics as a nonresponse.
"I don't think [the proposed rules keep] up with the ways that people are getting loans," Rao said. "There often is no visual observation anymore, and you can't force somebody to self-identify this [demographic information]. I wonder how accurate some of this data will be because of changes in how loans are being provided."
Read the full article on the Law360 website (subscription required)
"4 Points To Watch In CFPB's Small Biz Lending Data Proposal " was published by Law360, September 3 , 2021.