With everything else on its plate, it wouldn’t seem unreasonable to expect the CFPB to take a “hands off” approach to small business credit. However, that’s not what the CFPB intends to do, according to testimony given last week to the House Small Business Committee by Dan Sokolov, the CFPB’s Deputy Associate Director for its Division of Research, Markets and Regulations. While acknowledging that the CFPB’s jurisdiction over small business lending is limited, Sokolov testified that the CFPB intends to use data it collects on credit applications by small businesses and women- or minority-owned businesses to enforce fair lending laws and to provide the market with better data on small business lending. (The CFPB’s General Counsel is on record as saying that the Dodd-Frank requirement for lenders to report application data won’t be effective until the CFPB issues implementing regulations.) The CFPB is also looking to increase oversight of the credit reporting system so that personal credit reports of small business owners will be more accurate.
Small business lenders may be interested to learn the ways that, according to Sokolov’s testimony, they are being “helped” by the CFPB. For example, when the CFPB complies with laws that require it to consider the benefits and costs of proposed regulations on small banks and other lenders, the CFPB is “helping” small business lenders to reduce their regulatory burdens. Sokolov also cites the CFPB’s use of supervision and enforcement as helpful to small lenders because in many cases those tools impose “fewer burdens” than new regulations.