the statute requires annual reporting of the information to the CFPb,
but the details of the submission requirement (when, how, format, etc.)
await future bureau regulation writing.
retained by the bank for at least three years, but this and all other
information collected as part of this requirement must be kept
separate from the application and any accompanying information.
No underwriter access. The statute makes clear that bank
employees having decision-making authority should not be allowed
access to the applicant’s responses to the questions regarding the
type of business (or other demographic information). But the
statute also recognizes that in certain cases it may be necessary
for a decision maker to see the information (the rule talks about
where a bank determines the person “should have access”) or
where it’s just not feasible to clearly separate it, as in smaller banks.
In these cases, the bank must provide notice to the applicant that
access is being allowed along with the fact that the bank may not
discriminate on the basis of the information provided.
All of this will require careful scripting for commercial loan
officers (who, again, aren’t used to strict regulatory requirements
for applications) for virtually all commercial loans. They must
know what questions to ask, when to ask them, and where to
record the necessary information. Again, very HMDA-like.
For a covered small business or minority- or woman-owned
business loan application, the following information must be
compiled by the bank:
■ ■ application number and date received
■ ■ type and purpose of the credit being applied for
■ ■ amount of credit or credit limit applied for and the amount
■ ■ type and date of action taken on the application
■ ■ census tract of the applicant’s principal place of business
■ ■ gross annual revenue of the business during its previous fiscal year before application
■ ■ race, sex, and ethnicity of the principal owner(s) of the
■ ■ any other information the CFPB deems necessary
Note again the wild-card last point—this may not be a complete
list of data, if the bureau thinks additional information would
fulfill the purposes of the statute.
The record of required information retained by the bank
(we’ll call it a “business LAR”) may not include any personally
identifiable information of the applicant (such as name, phone
number, e-mail address, or specific address other than census
tract information). Again, this requires that the records be kept
separate from the application or other accompanying information.
mation to the CFPB, but the details of the submission requirement
(when, how, format, etc.) await future bureau regulation writing.
Availability. Banks must make this new business LAR available to any member of the public upon request, in the form the
bureau will specify.
The bureau will also make the information available to the
public, but it will use discretion to delete or modify any publicly available data in the interest of privacy. It may also compile
aggregate data for its own use (read: research or fair lending
analysis) and make these compilations available to the public as
well. Sound familiar?
This all sounds very HMDA-like, doesn’t it? Ask questions of
applicants, record information about the loan and the applicant,
submit it to a regulator, and make information publicly available.
That’s on purpose, as the ultimate reason we have this new require-
ment is stated right in the first section of the ECOA amendment:
The purpose of this section is to facilitate enforcement
of fair lending laws and enable communities, gov-
ernmental entities, and creditors to identify business
and community development needs and opportuni-
ties of women-owned, minority-owned, and small
Just like HMDA, this information will be utilized to ensure fair
lending laws and regulations are followed. The regulatory agencies
(along with community groups and the public) will be provided
with new hard data on where some commercial applications and
loans came from and what the characteristics of the applicants
and borrowers are.
This will be much more than an operational requirement.
Count on this information being crunched much like HMDA
data is today, with statistical and even regression testing being
performed. The regulatory process will also be very HMDA-like,
with data integrity, distributions, disparities, and differences being
compared and chosen as focal points in future fair lending exams.
For banks, analyzing small business lending will be easier
because there will be data on both minority and nonminority
loans, and thus direct comparisons (through disparities, comparative file review, regression, and so forth) can be made. It will be
more difficult for woman- and minority-owned large businesses,
because data will be collected only for them and not for control
group applications and loans (to male- or nonminority-owned
But in the end, this means the bank’s responsibilities will
be much like HMDA: Know your data and know your bank’s
small-business, minority-owned business, and woman-owned