The CFPB has filed its first status report with the California federal district court as required by the Stipulated Settlement Agreement in the lawsuit filed against the Bureau in May 2019 alleging wrongful delay in adopting regulations to implement Section 1071 of the Dodd-Frank Act.
Section 1071 amended the ECOA to require financial institutions to collect and report certain data in connection with credit applications made by women- or minority-owned businesses and small businesses. Such data includes the race, sex, and ethnicity of the principal owners of the business. The Stipulated Settlement Agreement, which the court approved in February 2020, established a timetable for the Bureau to engage in Section 1071 rulemaking and required the Bureau to provide status reports to the plaintiffs and the court every 90 days until a Section 1071 final rule is issued.
The first two deadlines in the Stipulated Settlement Agreement relate to the SBREFA process. The Agreement provides that the Bureau will release a SBREFA outline of proposals under consideration and alternatives considered by September 15, 2020, and will convene a SBREFA panel by October 15, 2020, or as soon as practicable thereafter if panel members are not available to convene.
The Bureau provided the following information in the status report:
- Bureau staff have started drafting sections of the SBREFA outline and have begun preliminary internal work on selecting the small entity representatives who will consult with the SBREFA panel.
- The Bureau’s announcement in March 2020 that due to COVID-19 it was postponing a survey of lenders to obtain estimates of the one-time costs they would incur to prepare and collect data required by Section 1071 may mean survey results will not be available for inclusion in the SBREFA outline. The Bureau believes that, if necessary, it can conduct the SBREFA process without these results.
- While the Bureau believes it is on track to meet the September 15 and October 15 SBREFA deadlines, the pandemic may “introduce uncertainty with respect to the Bureau’s future ability to meet these deadlines.” In addition, the Bureau must coordinate the SBREFA process with the SBA and the OMB, which both have important responsibilities in responding to the pandemic, including oversight and administration of the PPP program. The pandemic could also affect the Bureau’s ability to recruit small entity representatives to participate in the SBREFA process.
- As required by the Stipulated Settlement Agreement, the Bureau will notify the plaintiffs if it believes an extension of the SBREFA deadlines is warranted.