Main Street Alliance Members join suit against Trump Administration for Pulling Back on Data Collection to Protect Women-Owned, People of Color-Owned Small Businesses Against Discriminatory Lending Practices

Washington D.C.— Today, two small business owners and Main Street Alliance members joined the suit against the Trump administration for defying the Dodd-Frank Act by unlawfully failing to collect and disclose data on lending to women and people of color-owned small businesses. Initially filed by Democracy Forward on behalf of the California Reinvestment Coalition last month, three new plaintiffs joined the suit, including small business owners ReShonda Young of Iowa and Deborah Field from Oregon.

Dodd-Frank requires the Consumer Financial Protection Bureau to collect lending data from financial institutions and make it publicly available to facilitate enforcement of fair lending laws to curb lending discrimination. Congress further mandated that the CFPB issue rules to implement this data collection. Yet, in 2018, without any explanation, then-Acting Director Mick Mulvaney unlawfully halted the required rulemaking process and Director Kathy Kraninger has taken no meaningful steps to remedy this failure. The lack of data frustrates the ability of small businesses and organizations like CRC to detect and address obstacles women and people of color-owned small businesses face to obtaining credit.

“I feel it is my civic and moral responsibility to speak up about issues that are inherently unfair and discriminatory against small businesses in this country,” said Field, who co-owns Paperjam Press in Portland, Oregon, on why she is joining the suit. “Capital access is one of these issues because the financial systems are geared for the big and powerful.”

“Since Dodd-Frank was enacted nearly a decade ago, small business borrowers have been waiting for the CFPB to fulfill its mandate to collect and disclose lending data, especially on loans made to women and people of color,” said California Reinvestment Coalition Executive Director Paulina Gonzalez-Brito in an initial press release about the suit. “Under two Trump-appointed directors, the Bureau has failed to move forward on its obligation to implement the law. Small business is the engine of growth for our economy. Identifying discriminatory lending practices is critical to ending the racial wealth gap and economic disparities.”

Between 2017 and 2018, women started an average of 1,821 new businesses per day in the U.S., and the number of businesses owned by people of color has grown by 79 percent between 2007 and 2017. Yet, as the CFPB has acknowledged, current data is inadequate to fully understand, let alone remedy, the extent to which discriminatory lending creates credit deserts for small businesses and businesses owned by women and people of color. Section 1071 of Dodd-Frank was designed to fill this information gap by requiring financial institutions to maintain and disclose data about their actions on loan applications by women-owned, minority-owned and small businesses. By failing to implement Section 1071 of Dodd-Frank, the CFPB has unlawfully withheld and unreasonably delayed agency action, violating the Administrative Procedure Act.

“I am joining the suit against the CFPB because I have personally experienced, and watched other minority business owners experience, a lack of access to capital when trying to start and grow our businesses,” said ReShonda Young, owner of Popcorn Heaven in Waterloo, IA. “Oftentimes there is an outright denial, even when we have assets, credit scores and the ability to repay the loans. It's time for the CFPB to do its job so that the disparity in lending can be reigned in and minority business owners will not continue to fight an unfair fight when trying to start and grow our businesses.”

“Our small business members care about equitable access to credit, especially for women and people of color-owned businesses, who have historically been left out of credit markets,” said Amanda Ballantyne, National Director of the Main Street Alliance. “Collecting this data is key to ensuring a thriving small business economy.”

Under President Trump, the CFPB has failed to take needed steps to protect consumers, veterans and student borrowers. A recent news report described the “strategic neglect and bureaucratic self-sabotage” that characterized the CFPB’s governance under Mulvaney’s tenure. Another analysis found that under Director Kraninger, CFPB enforcement activity has declined to levels much lower than at any time since the agency’s inception.

The amendment was filed June 27, 2019 in the United States District Court for the Northern District of California.

 

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The Main Street Alliance works to provide small businesses a voice on the most pressing public policy issues across the nation. Our advocacy promotes vibrant businesses and healthy communities and fosters leadership development of socially responsible business leaders.

 

For immediate release: Thursday, June 27, 2019
Contact: Sarah Crozier, sarah@mainstreetalliance.org