A newly proposed data collection rule issued by the Consumer Financial Protection Bureau (CFPB) would place an undue burden on small business owners, farmers and lenders in South Carolina and across the United States, according to U.S. Sen. Tim Scott (R-SC), who requested that the bureau rethink its proposal.
The CFPB’s proposed rule — entitled Small Business Lending Data Collection Under the Equal Credit Opportunity Act (Regulation B) — would amend Regulation B to implement an amendment to the Equal Credit Opportunity Act made by section 1071 of the Dodd-Frank Act, according to a Jan. 5 letter Sen. Scott and U.S. Rep. William Timmons (R-SC) sent to CFPB Director Rohit Chopra.
“While we are extremely concerned with the burden that this proposed rule would have on small businesses and small community banks,” they wrote, “it has been brought to our attention that the proposed rule would have an outsized effect on Farm Credit institutions and the farmers that they serve.”
Sen. Scott and his colleague think that the CFPB has failed to take the appropriate steps to engage with these institutions on the proposed rule, which could “hurt not only these lending institutions, but American farmers themselves.”
“In short, we feel that these actions being proposed by the CFPB are misguided and ill-informed, especially considering the challenges that farmers are currently facing due to rising inflation, prolonged supply chain disruptions, and labor shortages,” the lawmakers wrote. “We strongly urge you to change course.”
While the proposed rule states that it would impact 40 percent of all depository institutions, it would simultaneously impact 100 percent of farm credit lenders due to the proposal’s definitions of “small business” and “business credit” that do not take into account the inherent differences between American farms and other American businesses, wrote the lawmakers.
“If the CFPB had actively worked to hear the concerns of the lenders they regulate, this type of oversight would not have happened,” they wrote, noting that the subsequent burden ultimately would trickle down to the lenders’ clients across all industries.”
“At a time when the federal government seems to be doing everything it can to make farmers’ jobs more difficult — we believe this unnecessary regulatory expansion is ill-timed and hurtful,” wrote Sen. Scott and his colleague.
They urged Chopra not to take any action without a thorough data collection process and careful consideration of input from all lenders and their clients.