Regulations that require they provide information to the federal government about their clients, makes it difficult for small banks to compete with large banks.
Independent Community Bankers of America (ICBA), an organization representing small banks, is asking a federal agency to use its authority to exempt small bankers from having to comply with new federal data-collection and -reporting requirements on small business lending.
The ICBA wrote to the Consumer Financial Protection Bureau explaining that reporting mandates required under Section 1071of the Dodd-Frank Act would disproportionately affect community banks’ ability to lend to small businesses. “Imposing data collection requirements on community bank small business lending will significantly degrade the ability of community banks to offer small businesses the type of credit they need in a timely and economically efficient manner,” ICBA wrote. “The cost of this new mandate will be disproportionately high for community banks that simply do not have the scale to spread compliance costs over a large asset base and will result in negatively impacting those the statute is trying to help—women-owned, minority-owned and small businesses.”
Besides asking the Consumer Financial Protection Bureau to take action, the ICBA continues its efforts to get Congress to repeal Section 1071, as advocated by the Treasury Department. An outright repeal would avoid higher borrowing costs, a reduction in access to credit, and inadvertent harm to small businesses the law is ostensibly intended to help.