On February 25, the CFPB released a fact sheet laying out its policy priorities for the next two years. The CFPB identified nine areas of focus, two of which are likely to have a direct impact on community banks: mortgages and small business lending. The CFPB’s prioritization of mortgage regulation should come as no surprise, given its focus on consumer credit markets since its inception. The focus on small business lending, however, is a new development that has the potential to affect community banks more broadly.
In the mortgage area, the CFPB mostly reiterated its prior guidance and regulations. For example, the release points to Dodd-Frank rules requiring that lenders assess a borrower’s ability to repay before making a mortgage loan and the new Home Mortgage Disclosure Act. The CFPB also noted that its enforcement team would work to ensure non-discriminatory access to mortgage credit and to protect delinquent borrowers from unfair tactics.
The more interesting development is the CFPB’s focus on small business lending. The CFPB’s release notes significant discrimination against minorities businesses as well as the lack of comprehensive data to track small business loans. To address these issues, the CFPB identifies three priorities:
- The Bureau will build a small business lending team and begin market research and outreach for a rulemaking on business lending data collection.
- Subject to an assessment of feasibility, the Bureau’s consumer response team will build the infrastructure to intake and analyze small business lending complaints.
- As part of its supervisory work, the Bureau will continue to examine small business lenders for compliance with fair lending laws.
Although Dodd-Frank gives the CFPB limited jurisdiction over small business lending (e.g., enforcement of the Equal Credit Opportunity Act), the CFPB has shown relatively little interest in small business lending. The inclusion of small business lending on the CFPB’s 2016 priority list signals that this may be changing. Additionally, some of the CFPB’s goals for regulating small business lending suggest that the Bureau may be focusing on more than just enforcing the ECOA. Community banks that specialize in small business lending should pay close attention to the CFPB’s activity in that space over the next few years.