NCRC applauds CFPB plan to collect Section 1071 small business loan data

Today, the Consumer Financial Protection Bureau (CFPB) released a request for comment regarding its proposal to implement Section 1071, the portion of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank) that required the CFPB to collect and publish small business lending data.

Jesse Van Tol, President and CEO of the National Community Reinvestment Coalition (NCRC), made the following statement:

“We applaud the CFPB for issuing a strong proposal to gather data that’s critical to understanding the flow of credit to small businesses and to exposing abusive and unfair lending practices. This data will be vital to achieving the Biden administration’s objective to advance economic equity. The ongoing lack of small business data, particularly for businesses owned by people of color and women, is a significant barrier to understanding the true level of disparities they face. Section 1071 will change that. The new, detailed data on access to credit for businesses owned by people of color and women will help us narrow wide gender and racial disparities in access to credit.

“It is our hope that the Section 1071 data replaces the current data reported by banks for their Community Reinvestment Act (CRA) exams. The current CRA exam for small business data does not provide the details we need to make sure banks are serving the smallest businesses in underserved communities. More detailed Section 1071 data, reported to CFPB, should become the data set used in CRA exams, just like Home Mortgage Disclosure Act data, which is also reported to CFPB and then referenced in CRA exams.

“NCRC’s mystery shopping and research show that disparities in access to credit remained significant during the pandemic, crippling many businesses owned by women and people of color. Our nation must take vigorous action to reduce racial and gender inequities. Today’s rule is a strong start. We will have little chance of success in reducing disparities in small business lending without this data. This data will be comprehensive, annually released and will reveal loans and applications by race, gender and revenue size of small businesses for the vast majority of lenders issuing small business loans.”

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Redlining and Neighborhood Health

Before the pandemic devastated minority communities, banks and government officials starved them of capital.

Lower-income and minority neighborhoods that were intentionally cut off from lending and investment decades ago today suffer not only from reduced wealth and greater poverty, but from lower life expectancy and higher prevalence of chronic diseases that are risk factors for poor outcomes from COVID-19, a new study shows.

The new study, from the National Community Reinvestment Coalition (NCRC) with researchers from the University of Wisconsin–Milwaukee Joseph J. Zilber School of Public Health and the University of Richmond’s Digital Scholarship Lab, compared 1930’s maps of government-sanctioned lending discrimination zones with current census and public health data.

Table of Content

  • Executive Summary
  • Introduction
  • Redlining, the HOLC Maps and Segregation
  • Segregation, Public Health and COVID-19
  • Methods
  • Results
  • Discussion
  • Conclusion and Policy Recommendations
  • Citations
  • Appendix

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