CFPB difficulties smaller business enterprise lending compliance guide | Orrick, Herrington & Sutcliffe LLP

The CFPB not too long ago issued a compliance guide for its final rule implementing Section 1071 of the Dodd-Frank Act. Constant with Section 1071, the final rule (issued at the finish of March) will call for monetary institutions to gather and supply to the Bureau information on lending to smaller corporations, defined as an entity with gross income below $five million in its final fiscal year (covered by InfoBytes right here). The guide: (i) contains a detailed summary of the final rule’s specifications, which includes information reporting deadlines (ii) offers extensive details on the sorts of information monetary institutions require to gather and report on smaller business enterprise lending applications and choices and (iii) contains parameters for covered institutions and covered originations. The guide additional breaks down reportable information points and explains the final rule’s “firewall” provision, which states that staff and officers of a monetary institution or its affiliates “involved in producing any determination” on a reportable application are typically prohibited from accessing applicant demographic details relating to ethnicity, race, sex, and status as a minority-owned, girls-owned, or LGBTQI+-owned business enterprise. The guide specifies that specific exceptions might apply to scenarios exactly where an employee involved in selection-producing need to have access to the information to fulfill their assigned job duties (e.g. a loan officer or loan processor). In these scenarios, monetary institutions are needed to supply notice to applicants that staff and officers involved in selection-producing might have access to their demographic information.

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