Better Markets filed a comment letter with the Consumer Financial Protection Bureau, in response to the Bureau’s proposal to require lenders to collect and report important information about credit applications from small businesses, including those owned by women or minorities. We support CFPB’s proposal to address economic inequality and promote fair access to credit as envisioned by Congress in Section 1071 of the Dodd-Frank Act. Assembling more comprehensive data is a critical step in enforcing the fair lending laws and removing some of the financial obstacles that have unfairly burdened women and minority entrepreneurs for centuries.
Why It Matters. It is no secret that women and people of color face unjustified economic hardships as a result of historical and ongoing discrimination in our society and in our economy. Women earn as little as 77 cents for every dollar earned by a man and own just 32 cents for every dollar owned by a man. At the same time, the typical Black household holds just 10% of the wealth of the typical White household, a disparity that amounts to an astonishing wealth differential of $10.6 trillion.
What We Said. The proposal is broad and appropriately so. The Bureau must not narrow it in response to industry calls for exemptions or exceptions for particular types of lenders, businesses, or loans. The CFPB must ensure that it collects sufficiently granular data on loan applicants and loan terms.
The Proposal would appropriately require that lenders collect and report a range of information about the businesses seeking credit, loan pricing, and lenders’ credit decisions. This information is critical to collect in part because lending discrimination is not just evidenced in the denial of loan applications submitted by women or minority borrowers. Lending discrimination also manifests itself in women or minority borrowers receiving less favorable loan terms than White borrowers.
Bottom Line. The data collected under the rule will be an essential tool in creating a fairer and more equitable financial system for all Americans, including those who have historically been shut out of the opportunity to engage in entrepreneurship. The data will be instrumental in providing underserved communities with the benefits that come from having vibrant small businesses. Assembling more comprehensive data is a critical step in serving these goals and ultimately addressing the unjustifiable economic inequality that has plagued our society and our economy for centuries. Better Markets therefore urges the CFPB to finalize the rule without delay and without dilution.
Read our Press Release here. Our full Comment Letter is here or click the button below.