Committee hears sharp disagreement over CFPBsection 1071 small-business data rule
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Summary
Witnesses and members debated whether the CFPB's section 1071 rule will protect small-business borrowers or impose excessive costs on community banks and borrowers; supporters called it transparency for lending disparities, opponents warned about privacy and compliance burdens.
Section 1071 of the Dodd‑Frank Act — the CFPB rule requiring expanded small‑business loan data collection — was a focal point for sharply divergent testimony.
Rebecca Romero Rainey (President and CEO, Independent Community Bankers of America) told the committee that many community banks view the rule as an intrusive data collection that will “compromise the privacy of small business applicants and effectively commoditize small business lending and increase the cost of credit.” She urged Congress to consider repeal by citing Congressman Roger Williams' 1071 repeal as a legislative vehicle mentioned in witness statements.
By contrast, Mitra Spaterra (Vice President for Federal Policy, Center for Responsible Lending) and Ranking Member Maxine Waters argued the rule is a “sunshine” provision that will illuminate disparities in small‑business lending. Spaterra told the committee that the data will help policy makers “make informed decisions about why people are not getting access to business loans in The United States.”
Susanna Marshall, Commissioner of the Arkansas State Bank Department, said she was “concerned” about the CFPB’s implementation approach and that the rule’s reporting burden would “increase and provide a significant burden on our institutions,” potentially driving small business lending outside the regulated sector. Cathy Owen, executive chair of Eagle Bank and Trust, and other community bankers echoed the privacy concerns and said the compliance cost for small banks could be “disproportionate,” noting the rule requires many additional data fields and a phased implementation that still imposes heavy demands.
Members pressed witnesses on specifics: whether most community banks are already collecting analogous data via call reports; whether the rule would push small business lending to online or non‑depository lenders; and whether the CFPB had provided adequate time or tailored exemptions for smaller institutions. Commissioner Marshall and several community bankers argued that call report data captures some small‑loan categories but does not substitute for the CFPB's new reporting scheme and that the incremental collection and reporting workload would be significant.
No formal action was taken on the rule at the hearing. Multiple members said they would pursue bills to modify or repeal section 1071, and committee counsel will circulate questions and follow‑ups to witnesses.