Letter to The Honorable Rohit Chopra, Director, Consumer Financial Protection Bureau (May 15, 2023)
Summary
In this May 15, 2023 letter, Ranking Members Maxine Waters of the Committee on Financial Services and Nydia M. Velázquez of the Committee on Small Business write to Director Rohit Chopra of the Consumer Financial Protection Bureau (CFPB). The letter applauds the CFPB for issuing small business lending rules that implement Section 1071 of the Dodd-Frank Act and requests a briefing for House Democratic Members on the final rule. It states that in 2022 there were over 32 million small businesses in the United States, employing 61.7 million U.S. workers. It cites testimony by Luz Urrutia, CEO of Accion Opportunity Fund, that the Section 1071 Rule would not be overly burdensome for small institutions.
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“Letter to The Honorable Rohit Chopra, Director, Consumer Financial Protection Bureau (May 15, 2023).”
Original at democrats-financialservices.house.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/4551-2023-05-15-ranking-members-vel-zquez-waters-request-briefing-att0-a7461de606/
, SHA-256 181f192b8654cf88e920cca619a47e9a102234bf58e978c94ebba84266b258e1.Full text
Congress of the United States
Washington, D.C. 20515
May 15, 2023
The Honorable Rohit Chopra
Director
Consumer Financial Protection Bureau
1700 G Street NW
Washington, DC 20552
Dear Director Chopra:
We applaud the Consumer Financial Protection Bureau (CFPB) for issuing long awaited
small business lending rules that implement Section 1071 of the Dodd-Frank Wall Street Reform
and Consumer Protection Act (Dodd-Frank Act). This is a significant step forward in nurturing
small businesses and communities across our nation, including women-owned and minority-
owned businesses, whose credit needs have long been underserved. While we are still reviewing
the final rules, we are pleased that the CFPB will phase in implementation, so that smaller
financial institutions have more time to prepare, and the Bureau has set up a helpline to support
any financial institution in their preparation to comply with the new rules. We respectfully
request a briefing for House Democratic Members so we can learn more about this important
final rule.
In 2010, we worked to secure the inclusion of Section 1071 in the Dodd-Frank Act,
which directed the CFPB to initiate rulemaking to collect and report to the public information
about small business loans, including demographic information about small business borrowers.
Unfortunately, it took a legal settlement during the Trump Administration requiring court
monitoring to spur the agency into action.1 The CFPB’s subsequent rulemaking process
considered a wide range of input from stakeholders, including small businesses, lenders, and
other stakeholders. The small business lending market is relatively opaque, but once these small
business lending rules take effect, we will finally have actionable data that the public, industry,
and policymakers can use to identify ways to foster small business growth and development.
After all, we know that small businesses are engines of growth in all of our communities, driving
wealth creation and upward mobility. When small businesses succeed, our economy is stronger,
more equitable, and more resilient.
In 2022, there were over 32 million small businesses in the United States, comprising
99.9% of all businesses, and employing 61.7 million U.S. workers (46.6% of U.S. employees). 2
Small businesses are the bedrock of the U.S. economy and communities, but not all small
businesses survive, especially when they first start up. Between March 2020 and March 2021,
1.1 million small businesses opened, but 965,995 of them closed. Disparities also remain in small
businesses’ access to capital. One report from 2019 found that nearly 83% of entrepreneurs do
not access a bank loan, and discussed the geographic, demographic and wealth barriers faced by
1
Alan S. Kaplinsky, CFPB and plaintiffs enter into settlement of lawsuit alleging wrongful delay in Section 1071
implementation, Ballard Spahr (Mar. 2, 2020).
2
SBA, Frequently Asked Questions About Small Business 2023 (Mar. 7, 2023).
those businesses in accessing the capital they need. 3 In 2019, a Government Accountability
Office report highlighted the limited data on agricultural credit access for women and people of
color, and discussed the barriers that socially disadvantaged farmers and ranchers, including
women and people of color, face in obtaining capital they need.4
Clear, reliable data can help us understand why some businesses struggle, and inform
policymakers of changes that can help those businesses prosper. More transparency will serve to
protect and foster small businesses and family farms no matter where they operate, who owns
them, or what kind of business they do. Importantly, reliable data can help small businesses and
financial institutions evolve and compete in a growing digital marketplace. Lending data made
available through this rule will help lenders of all sizes identify new business opportunities.
During a House Small Business Committee hearing last month, Luz Urrutia, CEO of the CDFI,
Accion Opportunity Fund, testified that the Section 1071 Rule would not be overly burdensome
for small institutions and will, in fact, create new business opportunities for small lenders due to
their ability to reach underserved markets.
In closing, we look forward to hosting a briefing with you in the near future, and we again
commend you and the CFPB staff for all the work that went into issuing these critical rules. We
are confident this new framework will promote transparency and competition in the small
business lending market for the benefit of all small businesses, our communities, and the U.S.
economy.
Sincerely,
Maxine Waters Nydia M. Velázquez
Ranking Member Ranking Member
U.S. House of Representatives
U.S. House of Representatives
Committee on Financial Services
Committee on Small Business
3
Ewing Marion Kauffman Foundation, Access to Capital for Entrepreneurs: Removing Barriers (Apr. 25, 2019).
4
GAO, AGRICULTURAL LENDING: Information on Credit and Outreach to Socially Disadvantaged Farmers and
Ranchers Is Limited (Jul. 2019).
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