Kraninger Signals Caution on Controversial Small Business Lending Policy

Consumer Financial Protection Bureau Director Kathy Kraninger has signaled a cautious approach in her plan to implement a controversial piece of Dodd-Frank, which requires the agency to collect data on minority- and women-owned small business lending.  

The CFPB has, so far, delayed Section 1071 of the Dodd-Frank Act, frustrating consumer advocates who say the data is critical to studying unequal access to funds. A symposium on the topic hosted by the CFPB on Wednesday is a sign that the bureau intends to move forward on the issue. 

But Kraninger, in her opening remarks at the symposium, stressed critiques of implementing a rule too quickly, repeating arguments made by Treasury Secretary Steven Mnuchin in a 2017 report when he recommended that the provision be repealed.

Kraninger and others who have advocated for the rule to be delayed say they worry the requirement will impose “unnecessary and undue costs” on lenders that would be passed on to women and minority small business owners.  

“There is concern with the burden to small entities, possible curtailment of credit and privacy considerations, as well as a general desire for consistency with current business practices," Kraninger said. “The bureau fully recognizes the sensitivities here, and we know that the rule needs to be done with great care and consideration in order that the rule not impede the ability of small businesses, including minority- and women-owned small businesses, to access the credit they need.” 

Others have argued for the bureau to speed up its timeline. John Taylor, president and founder of the National Community Reinvestment Coalition, said at the symposium that he’s heard the argument that regulations stymie business “for forever and a day.” 

"This isn’t a heavy burden. I don't understand why everyone’s freaking out about what the cost would be," he said. “There’s a lot of loans that are not being made because of disparate treatment. Let’s figure out how you create this opportunity.”

Kraninger’s measured tone has become a hallmark of her tenure at the CFPB. Coming on the heels of acting White House chief of staff Mick Mulvaney, Kraninger’s former boss at the Office of Management and Budget, Kraninger has promised a more bureaucratic and less-political approach.

On the small business data collection provision, consumer advocates are still waiting for the CFPB to release its final rule before casting their judgment. 

“It is good to see Kraninger’s intent to put small business owners first,” Amanda Ballantyne, the executive director of Main Street Alliance, which has spearheaded a lawsuit against the CFPB on the issue, said of Kraninger’s remarks. “However, the current system does not support transparency in lending, and it’s past time to implement this accountability.”