CFPB to Issue Proposed Rule on Credit Data Collection by Sept. 30

The Consumer Financial Protection Bureau will issue a Notice of Proposed Rulemaking by the end of September on the collection of race, sex, and ethnicity information from credit applications, according to court documents.

In May 2019, the California Reinvestment Coalition and other groups sued the CFPB in the U.S. District Court for the Northern District of California, accusing agency officials of dragging their feet by failing to implement Section 1071 of the Dodd-Frank Act, which requires the collection of race, sex and ethnicity of business owners in connection with credit applications.

The two sides settled the suit during the Trump Administration and the agency agreed to provide updates on the process. The agency last year sent a survey to lenders and convened a panel that is required under the Small Business Regulatory Enforcement Fairness Act.

Credit union trade groups have argued that they should be exempt from the reporting requirement since credit unions do not have a history of unfair lending. In addition, they have said that since they serve limited fields of membership, any reporting of such data would be skewed.

The CFPB has the power to exempt classes of financial institutions from agency rules, but the power has seldom, if ever, been used.

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