The Collusion of Fair Lending, CRA and Small Business Data Collection, and Reporting (Section 1071)

For the past decade, there has been a constant stream of enforcement actions against financial institutions for engaging in redlining. Redlining occurs when financial institution practices result in the restriction of lending in a particular geographic area, quite frequently a low-income or a high-minority population area. Redlining is:

• Usually cited as a fair lending violation
• Frequently listed as a weakness in a Community Reinvestment Act (CRA) management system
• Quite often listed as both a fair lending and a CRA concern
• Now there is Small Business Data Reporting
• Fair lending laws, the Equal Credit Opportunity, and Fair Housing Acts, prohibit illegal discrimination on a prohibited basis. CRA deals with income disparities, requiring financial institutions to meet the needs of their entire community, including low- and moderate-income areas. For years, both CRA and HMDA regulations have provided the data needed to test financial institutions on how well they do in meeting the needs of those they serve.

On March 30, 2023, the Consumer Financial Protection Bureau (CFPB) published an 888-page final rule to implement Section 1071 of the Dodd-Frank Act. That section amends the Equal Credit Opportunity Act (ECOA) to require financial institutions to collect and report certain data in connection with credit applications made by women, minorities, and/or LGBTQI+ owned businesses and small businesses.

The effective date is 90-days after publication in Federal Register

Compliance dates are tiered based on transaction volumes. The first tier will be required to report on October 1, 2024, and the final compliance date for tier 3 is January 1, 2026 The combination of these critical regulations will bring to light issues in lending policies and will highlight a lack of lending in certain areas which is a direct link to Redlining. The financial institutions that fail to meet the credit needs of its selected assessment area are a target of special interest groups. The populations of the redlined areas are often high minority (fair lending) and low income (CRA). That is the collision of fair lending and CRA. What will the future bring with the passing of Small Business Data Collection 1071 regulations?

What You’ll Learn

• The umbrella of laws and regulations that make up fair lending
• The proposed regulations for CRA and the intersection with fair lending
• Steps to detect potential redlining and actions to take to minimize problems
• The public data collection requirements, the annual reporting requirements, and what the data will say about your institution
• The concept of Reasonable Expected Marketing Area and its impact on fair lending, CRA, and Section 1071
• The issues present in recent cases, the penalties imposed on each institution and the corrective action ordered by the regulators and what we can learn from them

Who Should Attend
This program is designed for members of the board of directors, managers of all lending departments, bank counsel, compliance officers, loan officers, and auditors.

Instructor Bio
Kimberly Boatwright is EVP and Director of Risk and Compliance at Compliance Resource, LLC, and has more than two decades of experience working in the financial services industry. Ms. Boatwright is a well-regarded financial industry risk and compliance professional with a strong background in program development and implementation. She is a thought leader who specializes in Fair Lending, Anti-Money Laundering, OFAC, and consumer compliance. During her career, she has worked for and consulted with all types of financial institutions helping to establish and evolve compliance and risk programs. She is a frequent public speaker, trainer, and author on compliance and risk management topics. Boatwright is a Certified Regulatory Compliance Manager and a Certified Anti-Money Laundering Specialist.

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• Live Access, 30 Days OnDemand Playback, Presenter Materials and Handouts – $279
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