The Consumer Financial Protection Bureau says it’s going to take a closer look at lending to women- and minority-owned small businesses in 2017.
“Congress expressed concern that women-owned and minority-owned businesses may experience discrimination when they apply for credit, and has required the CFPB to take steps to ensure their fair access to credit,” wrote Patrice Ficklin, associate director of the CFPB’s Office of Fair Lending.
For starters, the CFPB will need to monitor loan approval rates to verify there’s a problem and measure how big it is.
The Dodd-Frank Act’s Section 1071 will require financial institutions to record the sex, race and ethnicity of the owners of small businesses and women- and minority-owned companies when they apply for credit.
But that rule hasn’t taken effect yet. According to the Ballard Spahr law firm, the bureau still needs to write the specific rules that will govern Section 1071’s reporting requirements. Work on the rules will probably start sometime in earnest in March.
Even so, the bureau might take enforcement action before the rules are finalized.
“We believe there is also a strong likelihood of increased CFPB supervisory and enforcement activity targeting small business lending even before the completion of Section 1071 rule-making,” Ballard Spahr reported.
In addition to small business lending, the CFPB said it will be investigating redlining in minority neighborhoods, as well as potential racial or ethnic discrimination in mortgage and student loan servicing.
The Consumer Financial Protection Bureau is an agency of the United States government responsible for consumer protection in the financial sector. The CFPB was created to provide a single point of accountability for enforcing federal consumer financial laws and protecting consumers in the financial marketplace.