On September 27, the Federal Reserve Board (FRB) issued a final rule amending Regulation B to provide that motor vehicle dealers are not required to comply with new data collection requirements in the Dodd-Frank Act until the FRB issues final regulations to implement the statutory requirements. The final rule temporarily relieves motor vehicle dealers from the statutory obligations under ECOA Section 704B and will take effect upon publication in the Federal Register, which is expected shortly. Although the Bureau has the authority to issue rules to implement ECOA Section 704B for most entities, the FRB retains authority to issue rules for certain motor vehicle dealers.
The Dodd-Frank Act amended the ECOA to require creditors to collect information about credit applications made by women- or minority-owned businesses and small businesses. The purpose of Section 704B is to facilitate enforcement of fair lending laws and to enable communities, governmental entities, and creditors to identify business and community development needs and opportunities for women- and minority-owned businesses as well as small businesses. The FRB believes this purpose is better served if detailed rules prescribe the method for data collection and reporting under Section 704B, as such rules would ensure that the data is collected and reported by motor vehicle dealers in a consistent and standardized way. To achieve some level of consistency, the implementing rules would provide motor vehicle dealers with uniform definitions and standards they can follow in collecting and reporting data. The FRB believes collection of data in a uniform manner under a final regulation will enhance data analysis and enforcement capabilities to ensure that the purpose behind Section 704B is better served. However, until the final regulation is enacted and collection parameters are more clearly defined, motor vehicle dealers are exempt from the data collection requirements of Section 704B.
The Bureau is required to implement the same rule for all creditors except certain motor vehicle dealers that are subject to the FRB’s jurisdiction. The CFPB previously announced that creditors are not obligated to comply with the data collection requirements until it issues regulations to implement the statutory change.