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Banks tell committee CFPB rule 10‑71 would raise costs, risk curtailing small business lending
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Summary
Bank trade groups and community bankers told the committee the CFPB’s small‑business lending rule (Regulation 10‑71) and broader compliance obligations under Dodd‑Frank threaten relationship lending and could push smaller institutions out of key lending lines.
Multiple members and witnesses raised alarms about CFPB rule‑making under section 10‑71 of Dodd‑Frank and the broader regulatory costs that affect small business and mortgage lending.
Lindsey Johnson of the Consumer Bankers Association said the bureau’s final 10‑71 rule expanded the data collection burden from an originally contemplated 13 fields to more than 80 in practice, creating an ‘‘extraordinary effort’’ that could prompt some lenders to stop small business lending. She testified that the rule’s scope and complexity would be particularly burdensome for community banks and could undermine relationship‑based lending in rural and underserved areas.
Rep. Pete Sessions, Rep. Tom Emmer and other members representing districts with many community banks asked how the rule interacts with existing privacy concerns and whether CFPB rule changes should face formal notice‑and‑comment rulemaking before any deletion or modification of personal data fields. Banks told the committee they support clear rules but urged statutory certainty so compliance obligations would not swing with administrations.
Witnesses also tied the compliance burden to a broader trend: community banks’ exit from mortgage origination because of higher origination and servicing costs and increased litigation risk. Several committee members read letters and anecdotal evidence from small banks saying mortgage operations were either curtailed or outsourced to larger institutions.
The committee did not enact any rule changes. Members said they will pursue bills to narrow the 10‑71 reporting threshold for covered businesses and to require notice‑and‑comment procedures before the CFPB alters data collection and deletion practices. Several members asked to enter supportive letters from local banking associations into the record.
