The Federal Reserve Board has moved to temporarily exempt auto dealers from pending requirements to collect and report information on credit applications made by women-owned, minority-owned, and small businesses.
The Fed’s proposal, which was published today in the Federal Register, would amend Regulation B under the Equal Credit Opportunity Act (ECOA) to exempt the auto dealers from the requirements of Section 1071 of the Dodd-Frank Wall Street Reform and Consumer Protection Act until implementing regulations, to be issued by the Fed, take effect. Section 1071 amended the ECOA to add Section 704B, which requires financial institutions to collect and report information on credit applications made by women-owned, minority-owned, and small businesses.
The Consumer Financial Protection Bureau (CFPB) has authority to issue rules implementing Section 704B for most entities. However, the Dodd-Frank Act carved out most auto dealers from the CFPB’s rulemaking authority and directed the Fed to issue rules implementing the ECOA for those auto dealers.
The Dodd-Frank Act made Section 1071 effective on the “designated transfer date,” currently scheduled for July 21, 2011. The CFPB issued a letter dated April 11, 2011, advising financial institutions under CFPB jurisdiction that they would not be required to begin collecting and reporting data under Section 1071 until the effective date of the CFPB’s implementing regulations. (Click here for a legal alert summarizing the CFPB’s letter.) The Fed, responding to inquiries from auto dealers about their obligations, agreed with the CFPB that implementing regulations were necessary for the data collected and reported to be useful. Comments on the Fed’s proposal must be submitted by July 29, 2011.