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With the appointment of Kathy Kraninger as the permanent director of the Consumer Financial Protection Bureau (CFPB), the agency can finally focus on the tasks at hand. Kraninger will now be responsible with counteracting the noise surrounding CFPB and buckle down to work on policy reforms intended to protect the American consumer. She will lead a team that is expected to deliver results and move forward with its small-business data collection rule.

Section 1071 of the Dodd-Frank Act directs the CFPB to collect data on lending to small businesses. The goal is to have a better understanding of the lending landscape particularly with businesses owned and operated by women and minorities.

With this principle serving as the foundation for the CFPB, four guidelines acting as the guiding principles include the following:

  1. The CFPB should conduct a comprehensive cost-benefit analysis of any potential rule. They should be open to public comments on the final proposal. Hence, the bureau will have a complete understanding of the practical impacts of the Section 1071 directive on small businesses and the economy. Since small-business borrowers are having difficulty obtaining access to credit, their inputs will allow the CFPB to make a rule that aligns with the actual needs of the intended recipients.
  2. The bureau should develop a “small business” definition that is specific and understandable. This will assist lending officers in identifying which businesses are subject to data collection and which are not.
  3. The bureau should limit data collection to the minimum requirements. With data breaches a possibility, data protection should be the top priority. Hence, securing borrower information should only be within the boundaries set by the statute. Such approaches safeguards small-business owners. Should CFPB collect more data, the lending process will take longer. Time is critical for any growing small business.
  4. The only way CFPB can protect small-business borrower information is to secure and keep data private. Releasing to the public any sensitive data for identification purposes is inappropriate. Such action is a major blow to small businesses.

With the guidelines in place, the bureau is geared to make a difference in the small-business lending market and see that businesses flourish over time.

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