Kathy Kraninger Signals Caution on Controversial Policy on Small Business Loans
In her plan to implement a contentious piece of Dodd-Frank, which allows the government to collect data on minority- and women-owned small business loans, Consumer Financial Protection Bureau Administrator has indicated a cautious approach.
To date, the CFPB has postponed Section 1071 of the Dodd-Frank Act, upsetting consumer advocates who argue that information is essential to the study of unequal access to funds. A Wednesday CFPB-hosted symposium on the subject is a sign that the agency plans to step forward on the issue.
Yet Kraninger highlighted criticism of enforcing a policy too fast in her opening remarks at the symposium, echoing arguments made by Treasury Secretary Steven Mnuchin in a 2017 study when he proposed the removal of the clause.
Kraninger and others who supported delaying the regulation say they were concerned that the provision would place “unfair and unnecessary expenses” on borrowers to be passed on to women and small business owners of minorities.
“The pressure on small businesses is an issue, credit and privacy concerns can be curtailed, as well as a general desire for continuity with current business practices,” Kraninger said.
“The office fully understands the sensitivities here, and we understand that the regulation needs to be done with great care and consideration so that the policy does not interfere with the ability of small businesses, especially small businesses operated by minorities and women, to receive the credit they need.”
Others have asked the department to accelerate the timetable. At the symposium, John Taylor, president and founder of the National Community Reinvestment Coalition, said he heard the argument that regulations are stymying industry “for ever and ever.”
“It’s not a heavy burden. I don’t understand why the cost should be freaked out by everyone,” he said. “Because of the disparate treatment, there are many loans that are not being created. Let’s find out how this opportunity you are making.”