CFPB Finalizes Rule to Create New Data Set on Small Business Lending in US

The Consumer Financial Protection Bureau (CFPB) on March 30 finally announced a long-anticipated rule requiring financial institutions to report race, ethnicity, gender and neighborhood data on small businesses that apply for loans.

Collecting such data on home loans has been required since 1975, in order to prevent lender “redlining” of neighborhoods based on race. That rule is the Home Mortgage Disclosure Act (HMDA).

USBC Executive Director Diana Dorn-Jones applauded the CFPB move, saying, “We know discrimination is holding back small business development and growth in our state. The lending data required by this rule will help New Mexico policymakers identify where the specific weak points are.”

Diana also pointed out that the CFPB needs to address enforcement, both of the new rule and of HMDA.

“We need to understand where and to whom home mortgage lenders are providing access to credit and capital.

“This data is particularly important to older historic neighborhoods across this country where lower income homeowners and renters are being pushed out as their neighborhoods become less and less affordable.

“Opportunities for homeownership and entrepreneurship are key to closing the wealth gap. The collection of this data will allow us to know if, as a nation, we are equitably moving in that direction,” she said.

USBC staff weighed in with support for the small business loan data collection rule in meetings with New Mexico’s Congressional delegation last week.

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United South Broadway Corporation USBC has been helping New Mexico communities prosper since 1986 by promoting fair housing, fair lending, crime prevention, financial literacy, locally-based commercial development, and opportunities for youth. We provide legal assistance and free housing counseling to homeowners facing foreclosure, and offer anti-racism workshops through our Anti-Racism Training Institute of the Southwest.