Senators introduce bill to roll back 1071 requirements

Sens. Katie Britt (R-Ala.) and John Boozman (R-Ark.) introduced legislation to shield community banks from the Consumer Financial Protection Bureau’s Section 1071 small-business reporting rule.

Details: The Preventing Regulatory Overreach to Empower Communities to Thrive and Ensure Data privacy (PROTECTED) Act would:

• Exempt community banks with less than $10 billion in assets or that have originated fewer than 2,500 small-business credit transactions in each of the previous two years.

• Restrict the definition of affected small businesses to entities with gross annual revenues of less than $1 million to reduce the reporting burden.

• Require the CFPB to conduct updated cost-benefit analyses prior to the rule’s implementation.

Other 1071 Legislation: The House Financial Services Committee in April advanced the ICBA-advocated 1071 Repeal to Protect Small Business Lending Act to repeal the statute that underlies the CFPB rule. Further, House Financial Services Committee Chairman French Hill’s (R-Ark.) ICBA-advocated Small LENDER Act (H.R. 941) would mitigate the impact of the 1071 rule by exempting more community banks and small businesses.

Latest on the CFPB’s Rule: As a result of three ongoing legal challenges to the 2023 final rule, some institutions—including all ICBA members—are protected by court orders that temporarily stay the 1071 rule’s compliance deadlines. In a court filing earlier this month in ICBA’s lawsuit challenging the Section 1071 rule, the CFPB confirmed that it plans to issue new 1071 rulemaking as soon as possible.

Background: The CFPB’s rule—issued in March 2023—requires lenders to collect and report data on credit applicants, including the race, sex, and ethnicity of the principal owners as well as gross annual revenue.