Independent Banker - December 2023 - 31

This ruling goes beyond the intent of
Congress, collecting more than double
the number of congressionally mandated
data points and creating an onerous
burden for community banks.
of small businesses, defining them as
those with more than $5 million in
gross annual revenue.
While the CFPB heard ICBA's
repeated requests throughout the
rulemaking process to stagger
implementation dates and includes a
phased-in implementation approach,
it still doesn't provide enough time
for financial institutions to implement
the complex data collection effort.
ICBA has told the CFPB that it needs
to provide at least three years for
financial institutions to comply to
allow for good-faith compliance.
Community banks also need a
12-month grace period after the
compliance date because the rule will
impose an entirely new compliance
environment for many.
ICBA staunchly opposes 1071 data
collection and encourages the CFPB to:
¡ Exclude community banks with
assets of $1.3 billion or less
¡ Define small businesses as those
with $1 million or less in gross
annual revenue
By ensuring more than 90% of
small-business loans are captured,
ICBA believes these updates will allow
the CFPB to meet Dodd-Frank Act
objectives while limiting the rule's
negative impact on small-business
access to credit.
ICBA is working with policymakers
to enact relief from 1071. In October,
the Senate passed an ICBA-advocated
resolution to nullify the CFPB's 1071
small-business data collection and
reporting requirements by a vote of
53-44. The House Financial Services
Committee also voted 29-21 to
advance a similar resolution blocking
the 1071 rule.
Challenging Section 1033
rulemaking
In October, the CFPB released a
proposal to implement standards
for sharing consumer financial
data under Section 1033 of the
Dodd-Frank Act, which gives
consumers the right to access their
financial records in electronic form.
The proposal staggers compliance
deadlines according to four tiers
based on data providers' size,
technology and use of third-party
service providers and legacy systems.
Compliance dates would range
from six months to four years after
publication of the final rule in the
Federal Register.
ICBA fully supports consumers'
rights to have access to their own
information and supports responsible
financial services innovation.
However, ICBA has concerns about
consumer privacy and data security.
The proposed rule would require
community banks to make certain
data relating to consumer transactions
and accounts available to consumers
and authorized third parties. ICBA
is concerned that nonbank entities-
which access customer information
and store bank login credentials-
don't take the same care in protecting
consumer privacy and data as
community banks do. These nonbank
entities that access customer account
data are the weak link, posing a real
threat of data breaches and consumer
harm, and should be the focus of the
CFPB's proposal.
ICBA communicated initial concerns
in a comment letter in January, soon
after the CFPB announced plans to
implement the rule. ICBA remains
opposed to 1033 data collection
efforts, encouraging the CFPB to limit
data requirements that might harm
consumers and banks, create safe
harbors for community banks and
focus on holding nonbank entities to
the same level of data standards as
community banks.
The road ahead
ICBA will continue to make its case to
the CFPB on Section 1033, submitting
additional feedback advocating for
community banks. Comments on the
proposal are due by Dec. 29.
In addition, ICBA will continue
to be a voice for all community
banks and pursue 1071 relief via
legislative, judicial and regulatory
channels action while encouraging the
CFPB to use its authority to exempt
community banks from onerous data
collection requirements.
Michael Emancipator (michael.
emancipator@icba.org) is ICBA
senior vice president and senior
regulatory counsel
independentbanker.org // 31
http://www.independentbanker.org
Independent Banker - December 2023

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