NAFCU President and CEO Dan Berger Monday wrote to CFPB Director Rohit Chopra to address the Bureau’s proposed rule to implement changes made by section 1071 of the Dodd-Frank Act and its likely effects as related to a proposal in the Build Back Better Act to authorize the Small Business Administration (SBA) to establish a direct 7(a) lending program.
The Bureau’s section 1071 proposed rule would require credit unions and credit union service organizations (CUSOs) that originated at least 25 covered small business credit transactions in each of the two preceding calendar years to collect and report certain small business credit application data, including data related to the ethnicity, race, and sex of business applicants’ principal owners.
While NAFCU will respond more fully to the Bureau’s section 1071 proposed rule during the comment period, Berger expressed time-sensitive concerns regarding the interaction between the proposed rule and proposed direct lending authorization.
“Not only does the legislative proposal risk the SBA becoming credit unions’ direct lending competitor, but the legislative proposal also risks fintechs, who have never been permitted to originate 7(a) loans, driving credit unions entirely out of 7(a) lending,” wrote Berger. “And the proposed rule, if adopted as written, would cause many credit unions to exit the business lending market altogether.
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