Regulation B; Equal Credit Opportunity, 36885-36887 [2011-15654]
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36885
Proposed Rules
Federal Register
Vol. 76, No. 121
Thursday, June 23, 2011
This section of the FEDERAL REGISTER
contains notices to the public of the proposed
issuance of rules and regulations. The
purpose of these notices is to give interested
persons an opportunity to participate in the
rule making prior to the adoption of the final
rules.
FEDERAL RESERVE SYSTEM
12 CFR Part 202
[Regulation B; Docket No. R–1426]
RIN No. 7100–AD–78
Regulation B; Equal Credit Opportunity
Board of Governors of the
Federal Reserve System.
ACTION: Proposed rule; request for
public comment.
AGENCY:
The Board is publishing for
public comment a proposed rule
amending Regulation B (Equal Credit
Opportunity). Section 704B of the Equal
Credit Opportunity Act (ECOA), as
added by Section 1071 of the DoddFrank Wall Street Reform and Consumer
Protection Act (Dodd-Frank Act or Act),
requires that financial institutions
collect and report information
concerning credit applications made by
women- or minority-owned businesses
and by small businesses. ECOA Section
704B becomes effective on the date that
rulemaking authority for ECOA is
transferred to the Consumer Financial
Protection Bureau (CFPB), which is July
21, 2011. Although the CFPB will have
the authority to issue rules to
implement ECOA Section 704B for most
entities, the Board retains authority to
issue rules for certain motor vehicle
dealers. This proposed rule excepts
motor vehicle dealers that are subject to
the Board’s jurisdiction from the
requirements of ECOA Section 704B
temporarily, until the effective date of
final rules that will be issued by the
Board to implement that provision.
DATES: Comments on this proposed rule
must be received on or before July 29,
2011.
ADDRESSES: You may submit comments,
identified by Docket No. R–1426 and
RIN No. 7100–AD–78, by any of the
following methods:
• Agency Web Site: https://
www.federalreserve.gov. Follow the
instructions for submitting comments at
https://www.federalreserve.gov/
generalinfo/foia/ProposedRegs.cfm.
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SUMMARY:
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• Federal eRulemaking Portal: https://
www.regulations.gov. Follow the
instructions for submitting comments.
• E-mail:
regs.comments@federalreserve.gov.
Include the docket number in the
subject line of the message.
• Fax: (202) 452–3819 or (202) 452–
3102.
• Mail: Address to Jennifer J. Johnson,
Secretary, Board of Governors of the
Federal Reserve System, 20th Street and
Constitution Avenue, NW., Washington,
DC 20551.
All public comments will be made
available on the Board’s Web site at
https://www.federalreserve.gov/
generalinfo/foia/ProposedRegs.cfm as
submitted, unless modified for technical
reasons. Accordingly, comments will
not be edited to remove any identifying
or contact information. Public
comments may also be viewed
electronically or in paper in Room MP–
500 of the Board’s Martin Building (20th
and C Streets, NW.) between 9 a.m. and
5 p.m. on weekdays.
FOR FURTHER INFORMATION CONTACT:
Lorna Neill or Nikita Pastor, Senior
Attorneys, Division of Consumer and
Community Affairs, Board of Governors
of the Federal Reserve System,
Washington, DC 20551, at (202) 452–
2412 or (202) 452–3667. For users of
Telecommunications Device for the Deaf
(TDD) only, contact (202) 263–4869.
SUPPLEMENTARY INFORMATION:
I. Background
Section 704B of the Equal Credit
Opportunity Act (ECOA), as added by
Section 1071 of the Dodd-Frank Wall
Street Reform and Consumer Protection
Act 1 (Dodd-Frank Act or Act), requires
that financial institutions collect and
report information concerning credit
applications made by women- or
minority-owned businesses and by
small businesses. 15 U.S.C. 1691c–2.
The statute directs financial institutions
to compile and maintain the data ‘‘in
accordance with regulations of the
Bureau.’’ ECOA Section 704B(e)(1), 15
U.S.C. 1691c–2(e)(1). The purpose of
Section 704B is ‘‘to facilitate
enforcement of fair lending laws and
enable communities, governmental
entities, and creditors to identify
business and community development
needs and opportunities of women1 Public
PO 00000
Law 111–203, 124 Stat. 1376 (2010).
Frm 00001
Fmt 4702
Sfmt 4702
owned, minority-owned, and small
businesses.’’ ECOA Section 704B
becomes effective on the date that
rulemaking authority for ECOA is
generally transferred to the Consumer
Financial Protection Bureau (CFPB),
which is July 21, 2011.
On April 11, 2011, the CFPB issued a
letter concluding that financial
institutions have no obligations under
Section 704B until the CFPB issues
regulations to implement the
requirements. The CFPB letter notes that
Congress intended Section 704B to
produce reliable and consistent data
that can be analyzed by the CFPB, other
government agencies, and members of
the public to facilitate enforcement of
fair lending laws and to identify
business and community development
needs. Based on the statutory text,
purpose, and legislative history, the
CFPB letter concluded that
implementing regulations are necessary
to ensure that data are collected and
reported in a consistent, standardized
fashion that allows for sound analysis
by the CFPB and other users of data.
Although the CFPB will have
authority to issue rules to implement
ECOA Section 704B for most entities,
the Board retains authority to issue rules
for motor vehicle dealers covered by
Section 1029(a) of the Act.2 12 U.S.C.
5519. Thus, the Board is responsible for
issuing regulations to implement the
amendments made by Section 704B for
motor vehicle dealers covered by
Section 1029(a) of the Dodd-Frank Act.
Consequently, the Board has received
inquiries as to whether motor vehicle
2 Section 1029(a) of the Dodd-Frank Act states:
‘‘Except as permitted in subsection (b), the Bureau
may not exercise any rulemaking * * * authority
* * * over a motor vehicle dealer that is
predominantly engaged in the sale and servicing of
motor vehicles, the leasing and servicing of motor
vehicles, or both.’’ 12 U.S.C. 5519(a). Section
1029(b) of the Dodd-Frank Act states: ‘‘Subsection
(a) shall not apply to any person, to the extent such
person (1) provides consumers with any services
related to residential or commercial mortgages or
self-financing transaction involving real property;
(2) operates a line of business (A) that involves the
extension of retail credit or retail leases involving
motor vehicles; and (B) in which (i) the extension
of retail credit or retail leases are provided directly
to consumers and (ii) the contract governing such
extension of retail credit or retail leases is not
routinely assigned to an unaffiliated third party
finance or leasing source; or (3) offers or provides
a consumer financial product or service not
involving or related to the sale, financing, leasing,
rental, repair, refurbishment, maintenance, or other
servicing of motor vehicles, motor vehicle parts, or
any related or ancillary product or service.’’ 12
U.S.C. 5519(b).
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36886
Federal Register / Vol. 76, No. 121 / Thursday, June 23, 2011 / Proposed Rules
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dealers will need to comply with the
requirements of ECOA Section 704B
before implementing regulations are
issued.
The Board believes that detailed rules
to implement ECOA Section 704B are
necessary to ensure that data collected
and reported under that provision are
useful. The purposes of the statute are
to facilitate fair lending enforcement
and to identify business and community
development needs and opportunities of
women-owned, minority-owned, and
small businesses. To support sound
analysis by users of the data, it should
be collected and reported in a consistent
and standardized way. To achieve this,
implementing rules can provide motor
vehicle dealers with uniform definitions
and standards that they can follow in
collecting and reporting data.
Accordingly, this proposed rule
excepts motor vehicle dealers covered
by Section 1029(a) of the Dodd-Frank
Act from any obligation to comply with
ECOA Section 704B until the Board
issues final regulations to implement
that provision and those regulations
become effective. This proposed rule is
consistent with the views expressed by
the CFPB, and is supported by the text
and purpose of Section 1071 of the
Dodd-Frank Act. The applicability of
this proposed rule is limited to Section
1071 and does not affect the
implementation date of any other
provision of the Dodd-Frank Act.
II. Legal Authority
ECOA Section 703, as amended by
Section 1085 of the Dodd-Frank Act,
directs the Board to prescribe
regulations to carry out ECOA’s
purposes for motor vehicle dealers
covered by Section 1029(a) of the DoddFrank Act. 15 U.S.C. 1691b(f). In
addition, ECOA Section 703 authorizes
the Board to issue regulations that
contain such classifications,
differentiation, or other provisions, or
that provide for such adjustments and
exceptions for any class of transactions,
as in the judgment of the Board are
necessary or proper to effectuate the
purposes of ECOA, to prevent
circumvention or evasion of ECOA, or to
facilitate or substantiate compliance
with ECOA. Id. Finally, ECOA Section
704B(g)(2) contains authority for
exceptions or exemptions for any class
of financial institutions as deemed
necessary or appropriate to carry out the
purposes of this section. 15 U.S.C.
1691c–2(g)(2).
Pursuant to this authority, the
proposed rule excepts motor vehicle
dealers covered by Section 1029(a) of
the Dodd-Frank Act temporarily from
the requirement to comply with ECOA
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Section 704B, until the effective date of
final rules that will be issued by the
Board to implement Section 704B. The
Board believes that this exception is
necessary to effectuate the purposes of
ECOA and facilitate compliance. First,
ECOA Section 704B states that the
purpose is ‘‘to facilitate enforcement of
fair lending laws and enable
communities, governmental entities,
and creditors to identify business and
community development needs and
opportunities of women-owned,
minority-owned, and small businesses.’’
15 U.S.C. 1691c–2(a). The Board
believes that this purpose is better
served if there are detailed rules that
prescribe the method for collecting and
reporting of data under Section 704B.
The collection of data in a uniform
manner under such rules will enhance
data analysis and enforcement
capabilities. In addition, the text of
ECOA Section 704B contemplates that
regulations are necessary to implement
this provision by directing that financial
institutions compile and maintain the
data ‘‘in accordance with regulations of
the Bureau.’’ 3 Finally, implementing
regulations will facilitate compliance by
providing guidance on how motor
vehicle dealers can comply with the
statutory requirements in a manner that
effectuates the legislative purposes.
III. Section-by-Section Analysis
Section 202.17 Data Collection for
Credit Applications by Women-Owned,
Minority-Owned, or Small Businesses
17(a) Effective Date for Motor Vehicle
Dealers
Section 704B of ECOA, as added by
Section 1071 of the Dodd-Frank Act,
requires that financial institutions
collect and report information
concerning credit applications made by
women- or minority-owned businesses
and by small businesses. 15 U.S.C.
1691c–2. The term ‘‘financial
institution’’ includes any entity that
engages in any financial activity. 15
U.S.C. 1691c–2(h)(1). Although the term
‘‘financial activity’’ is not defined in
ECOA or the Dodd-Frank Act, motor
vehicle dealers covered by Section
1029(a) of the Dodd-Frank Act may be
financial institutions subject to the
requirements of ECOA Section 704B.
This section of ECOA becomes effective
3 See ECOA Section 704B(e)(1), 15 U.S.C. 1691c–
2(e)(1) (‘‘Each financial institution shall compile
and maintain, in accordance with regulations of the
Bureau, a record of the information provided by any
loan applicant * * *’’); ECOA Section 704B(b), 15
U.S.C. 1691c–2(b) (‘‘Subject to the requirements of
this section * * * the financial institution shall
* * * maintain a record of the responses * * *’’).
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on the designated transfer date, which is
July 21, 2011.
The proposed rule provides that no
motor vehicle dealer covered by Section
1029(a) of the Dodd-Frank Wall Street
Reform and Consumer Protection Act,
12 U.S.C. 5519(a), shall be required to
comply with the requirements of
Section 704B of the Equal Credit
Opportunity Act, 15 U.S.C. 1691c–2,
until the effective date of final rules
issued by the Board to implement
Section 704B of the Equal Credit
Opportunity Act, 15 U.S.C. 1691c–2.
Section 202.17(a). Moreover, the
proposed rule provides that the rule
shall not be construed to affect the
effective date of Section 704B ECOA for
any person other than a motor vehicle
dealer covered by Section 1029(a) of the
Dodd-Frank Act.
IV. Paperwork Reduction Act
In accordance with the Paperwork
Reduction Act (PRA) of 1995 (44 U.S.C.
3506; 5 CFR part 1320 Appendix A.1),
the Board reviewed the proposed rule
under the authority delegated to the
Board by the Office of Management and
Budget. The rule contains no collections
of information under the PRA. See 44
U.S.C. 3502(3). Accordingly, there is no
paperwork burden associated with the
rule.
V. Regulatory Flexibility Analysis
The Regulatory Flexibility Act (RFA),
5 U.S.C. 601–612, requires an agency to
perform an initial and final regulatory
flexibility analysis on the impact a rule
is expected to have on small entities.
The Small Business Administration
(SBA) establishes size standards that
define which entities are small
businesses for purposes of the RFA.4
The size standard to be considered a
small business is: $175 million or less
in assets for banks and other depository
institutions; and $7 million or less in
annual revenues for the majority of nonbank entities that are likely to be subject
to the final rules.
Under Section 605(b) of the RFA, 5
U.S.C. 605(b), the initial regulatory
flexibility analysis otherwise required
under Section 603 of the RFA is not
required if an agency certifies, along
with a statement providing the factual
basis for such certification, that the rule
will not have a significant economic
impact on a substantial number of small
entities. Based on its initial analysis and
for the reasons stated below, the Board
believes that this proposed rule would
4 U.S. Small Business Administration, Table of
Small Business Size Standards Matched to North
American Industry Classification System Codes,
available at https://www.sba.gov/idc/groups/public/
documents/sba_homepage/serv_sstd_tablepdf.pdf.
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Federal Register / Vol. 76, No. 121 / Thursday, June 23, 2011 / Proposed Rules
not have a significant economic impact
on a substantial number of small
entities.
A. Statement of Reasons, Objectives,
and Legal Basis for the Proposed Rule
Section 704B of the Equal Credit
Opportunity Act (ECOA), as added by
Section 1071 of the Dodd-Frank Wall
Street Reform and Consumer Protection
Act (Dodd-Frank Act or Act), requires
that financial institutions collect and
report information concerning credit
applications made by women- or
minority-owned businesses and by
small businesses. ECOA Section 704B
becomes effective on the date that
rulemaking authority for ECOA is
transferred to the Consumer Financial
Protection Bureau (CFPB), which is July
21, 2011. Although the CFPB will have
the authority to issue rules to
implement ECOA Section 704B for most
entities, the Board retains authority to
issue rules for certain motor vehicle
dealers. This proposed rule excepts
motor vehicle dealers that are subject to
the Board’s jurisdiction from the
requirements of ECOA Section 704B
temporarily, until the effective date of
final rules that will be issued by the
Board to implement that provision. The
SUPPLEMENTARY INFORMATION above
contains information on the reasons,
objectives and legal basis for the
proposed rule.
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B. Small Entities Affected by the
Proposed Rule
The proposed rule applies to motor
vehicle dealers covered by Section
1029(a) of the Dodd-Frank Act.5 The
total number of small entities covered
by the final rules is unknown, because
the Board does not have data on the
number of small entities that are motor
vehicle dealers covered by Section
5 Section 1029(a) of the Dodd-Frank Act states:
‘‘Except as permitted in subsection (b), the Bureau
may not exercise any rulemaking * * * authority
* * * over a motor vehicle dealer that is
predominantly engaged in the sale and servicing of
motor vehicles, the leasing and servicing of motor
vehicles, or both.’’ 12 U.S.C. 5519(a). Section
1029(b) of the Dodd-Frank Act states: ‘‘Subsection
(a) shall not apply to any person, to the extent such
person (1) provides consumers with any services
related to residential or commercial mortgages or
self-financing transaction involving real property;
(2) operates a line of business (A) that involves the
extension of retail credit or retail leases involving
motor vehicles; and (B) in which (i) the extension
of retail credit or retail leases are provided directly
to consumers and (ii) the contract governing such
extension of retail credit or retail leases is not
routinely assigned to an unaffiliated third party
finance or leasing source; or (3) offers or provides
a consumer financial product or service not
involving or related to the sale, financing, leasing,
rental, repair, refurbishment, maintenance, or other
servicing of motor vehicles, motor vehicle parts, or
any related or ancillary product or service.’’ 12
U.S.C. 5519(b).
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1029(a). Furthermore, it is not clear how
many motor vehicle dealers covered by
Section 1029(a) receive credit
applications from women- or minorityowned business or small businesses.
Nevertheless, there are likely to be no
small entities affected by the final rule
because the rule merely preserves the
status quo by granting a temporary
exemption from the requirement to
comply with the statute when it takes
effect on July 21, 2011.
C. Recordkeeping, Reporting, and
Compliance Requirements
The proposed rule would not impose
any new recordkeeping, reporting, or
compliance requirements. Instead, the
proposed rule temporarily would delay
such requirements until the Board
issues final implementing regulations
and the regulations become effective.
D. Identification of Duplicative,
Overlapping, or Conflicting Federal
Regulations
The Board has not identified any
Federal statutes or regulations that
would duplicate, overlap, or conflict
with the proposed rule.
E. Significant Alternatives to the
Proposed Revisions
The Board is not aware of any
significant alternatives that would
further minimize any significant
economic impact of the proposed rule
on small entities, but solicits comment
on this approach.
List of Subjects in 12 CFR Part 202
Aged, Banks, Banking, Civil rights,
Credit, Discrimination, Federal Reserve
System, Marital status discrimination,
Penalties, Religious discrimination,
Reporting and recordkeeping
requirements, Sex discrimination.
Authority and Issuance
For the reasons set forth in the
preamble, the Board proposes to amend
Regulation B, 12 CFR part 202, as
follows:
PART 202—EQUAL CREDIT
OPPORTUNITY (REGULATION B)
1. The authority citation for part 202
is revised to read as follows:
Authority: 15 U.S.C. 1691–1691f; Pub. L.
111–203, 124 Stat. 1376.
2. Add § 202.17 to read as follows:
§ 202.17 Data collection for credit
applications by women-owned, minorityowned, or small businesses.
(a) Effective date for motor vehicle
dealers. No motor vehicle dealer
covered by section 1029(a) of the DoddFrank Wall Street Reform and Consumer
PO 00000
Frm 00003
Fmt 4702
Sfmt 4702
36887
Protection Act, 12 U.S.C. 5519(a), shall
be required to comply with the
requirements of section 704B of the
Equal Credit Opportunity Act, 15 U.S.C.
1691c–2, until the effective date of final
rules issued by the Board to implement
section 704B of the Act, 15 U.S.C.
1691c–2. This paragraph shall not be
construed to affect the effective date of
section 704B of the Act for any person
other than a motor vehicle dealer
covered by section 1029(a) of the DoddFrank Wall Street Reform and Consumer
Protection Act.
By order of the Board of Governors of the
Federal Reserve System, June 17, 2011.
Jennifer J. Johnson,
Secretary of the Board.
[FR Doc. 2011–15654 Filed 6–22–11; 8:45 am]
BILLING CODE 6210–01–P
SMALL BUSINESS ADMINISTRATION
13 CFR Chapter I
[Docket No.: SBA–2011–0012]
Reducing Regulatory Burden;
Retrospective Review Under E.O.
13563
Small Business Administration.
Request for information.
AGENCY:
ACTION:
In response to the President’s
Executive Order 13563, Improving
Regulation and Regulatory Review, the
Small Business Administration (SBA)
has developed a preliminary
retrospective review plan for
periodically analyzing its existing
significant regulations to determine
whether those regulations should be
modified, streamlined, expanded or
repealed. SBA is inviting members of
the public to submit comments on this
review plan, including the list of
candidate rules for review. The goal of
the retrospective review is to make
SBA’s regulatory program more effective
and less burdensome in achieving the
agency’s regulatory objectives, while
continuing to promote economic
growth, innovation, and job creation
within the small business community
DATES: Comments must be received on
or before July 25, 2011.
ADDRESSES: You may submit comments,
identified by Docket No. SBA–2011–
0012 using any of the following
methods:
• Federal eRulemaking Portal: https://
www.regulations.gov. Identify
comments by ‘‘Docket No. SBA–2011–
0012, Regulatory Burden RFI,’’ and
follow the instructions for submitting
comments.
SUMMARY:
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Agencies
[Federal Register Volume 76, Number 121 (Thursday, June 23, 2011)]
[Proposed Rules]
[Pages 36885-36887]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-15654]
========================================================================
Proposed Rules
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
========================================================================
Federal Register / Vol. 76, No. 121 / Thursday, June 23, 2011 /
Proposed Rules
[[Page 36885]]
FEDERAL RESERVE SYSTEM
12 CFR Part 202
[Regulation B; Docket No. R-1426]
RIN No. 7100-AD-78
Regulation B; Equal Credit Opportunity
AGENCY: Board of Governors of the Federal Reserve System.
ACTION: Proposed rule; request for public comment.
-----------------------------------------------------------------------
SUMMARY: The Board is publishing for public comment a proposed rule
amending Regulation B (Equal Credit Opportunity). Section 704B of the
Equal Credit Opportunity Act (ECOA), as added by Section 1071 of the
Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank
Act or Act), requires that financial institutions collect and report
information concerning credit applications made by women- or minority-
owned businesses and by small businesses. ECOA Section 704B becomes
effective on the date that rulemaking authority for ECOA is transferred
to the Consumer Financial Protection Bureau (CFPB), which is July 21,
2011. Although the CFPB will have the authority to issue rules to
implement ECOA Section 704B for most entities, the Board retains
authority to issue rules for certain motor vehicle dealers. This
proposed rule excepts motor vehicle dealers that are subject to the
Board's jurisdiction from the requirements of ECOA Section 704B
temporarily, until the effective date of final rules that will be
issued by the Board to implement that provision.
DATES: Comments on this proposed rule must be received on or before
July 29, 2011.
ADDRESSES: You may submit comments, identified by Docket No. R-1426 and
RIN No. 7100-AD-78, by any of the following methods:
Agency Web Site: https://www.federalreserve.gov. Follow the
instructions for submitting comments at https://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm.
Federal eRulemaking Portal: https://www.regulations.gov.
Follow the instructions for submitting comments.
E-mail: regs.comments@federalreserve.gov. Include the
docket number in the subject line of the message.
Fax: (202) 452-3819 or (202) 452-3102.
Mail: Address to Jennifer J. Johnson, Secretary, Board of
Governors of the Federal Reserve System, 20th Street and Constitution
Avenue, NW., Washington, DC 20551.
All public comments will be made available on the Board's Web site
at https://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm as
submitted, unless modified for technical reasons. Accordingly, comments
will not be edited to remove any identifying or contact information.
Public comments may also be viewed electronically or in paper in Room
MP-500 of the Board's Martin Building (20th and C Streets, NW.) between
9 a.m. and 5 p.m. on weekdays.
FOR FURTHER INFORMATION CONTACT: Lorna Neill or Nikita Pastor, Senior
Attorneys, Division of Consumer and Community Affairs, Board of
Governors of the Federal Reserve System, Washington, DC 20551, at (202)
452-2412 or (202) 452-3667. For users of Telecommunications Device for
the Deaf (TDD) only, contact (202) 263-4869.
SUPPLEMENTARY INFORMATION:
I. Background
Section 704B of the Equal Credit Opportunity Act (ECOA), as added
by Section 1071 of the Dodd-Frank Wall Street Reform and Consumer
Protection Act \1\ (Dodd-Frank Act or Act), requires that financial
institutions collect and report information concerning credit
applications made by women- or minority-owned businesses and by small
businesses. 15 U.S.C. 1691c-2. The statute directs financial
institutions to compile and maintain the data ``in accordance with
regulations of the Bureau.'' ECOA Section 704B(e)(1), 15 U.S.C. 1691c-
2(e)(1). The purpose of Section 704B is ``to facilitate enforcement of
fair lending laws and enable communities, governmental entities, and
creditors to identify business and community development needs and
opportunities of women-owned, minority-owned, and small businesses.''
ECOA Section 704B becomes effective on the date that rulemaking
authority for ECOA is generally transferred to the Consumer Financial
Protection Bureau (CFPB), which is July 21, 2011.
---------------------------------------------------------------------------
\1\ Public Law 111-203, 124 Stat. 1376 (2010).
---------------------------------------------------------------------------
On April 11, 2011, the CFPB issued a letter concluding that
financial institutions have no obligations under Section 704B until the
CFPB issues regulations to implement the requirements. The CFPB letter
notes that Congress intended Section 704B to produce reliable and
consistent data that can be analyzed by the CFPB, other government
agencies, and members of the public to facilitate enforcement of fair
lending laws and to identify business and community development needs.
Based on the statutory text, purpose, and legislative history, the CFPB
letter concluded that implementing regulations are necessary to ensure
that data are collected and reported in a consistent, standardized
fashion that allows for sound analysis by the CFPB and other users of
data.
Although the CFPB will have authority to issue rules to implement
ECOA Section 704B for most entities, the Board retains authority to
issue rules for motor vehicle dealers covered by Section 1029(a) of the
Act.\2\ 12 U.S.C. 5519. Thus, the Board is responsible for issuing
regulations to implement the amendments made by Section 704B for motor
vehicle dealers covered by Section 1029(a) of the Dodd-Frank Act.
Consequently, the Board has received inquiries as to whether motor
vehicle
[[Page 36886]]
dealers will need to comply with the requirements of ECOA Section 704B
before implementing regulations are issued.
---------------------------------------------------------------------------
\2\ Section 1029(a) of the Dodd-Frank Act states: ``Except as
permitted in subsection (b), the Bureau may not exercise any
rulemaking * * * authority * * * over a motor vehicle dealer that is
predominantly engaged in the sale and servicing of motor vehicles,
the leasing and servicing of motor vehicles, or both.'' 12 U.S.C.
5519(a). Section 1029(b) of the Dodd-Frank Act states: ``Subsection
(a) shall not apply to any person, to the extent such person (1)
provides consumers with any services related to residential or
commercial mortgages or self-financing transaction involving real
property; (2) operates a line of business (A) that involves the
extension of retail credit or retail leases involving motor
vehicles; and (B) in which (i) the extension of retail credit or
retail leases are provided directly to consumers and (ii) the
contract governing such extension of retail credit or retail leases
is not routinely assigned to an unaffiliated third party finance or
leasing source; or (3) offers or provides a consumer financial
product or service not involving or related to the sale, financing,
leasing, rental, repair, refurbishment, maintenance, or other
servicing of motor vehicles, motor vehicle parts, or any related or
ancillary product or service.'' 12 U.S.C. 5519(b).
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The Board believes that detailed rules to implement ECOA Section
704B are necessary to ensure that data collected and reported under
that provision are useful. The purposes of the statute are to
facilitate fair lending enforcement and to identify business and
community development needs and opportunities of women-owned, minority-
owned, and small businesses. To support sound analysis by users of the
data, it should be collected and reported in a consistent and
standardized way. To achieve this, implementing rules can provide motor
vehicle dealers with uniform definitions and standards that they can
follow in collecting and reporting data.
Accordingly, this proposed rule excepts motor vehicle dealers
covered by Section 1029(a) of the Dodd-Frank Act from any obligation to
comply with ECOA Section 704B until the Board issues final regulations
to implement that provision and those regulations become effective.
This proposed rule is consistent with the views expressed by the CFPB,
and is supported by the text and purpose of Section 1071 of the Dodd-
Frank Act. The applicability of this proposed rule is limited to
Section 1071 and does not affect the implementation date of any other
provision of the Dodd-Frank Act.
II. Legal Authority
ECOA Section 703, as amended by Section 1085 of the Dodd-Frank Act,
directs the Board to prescribe regulations to carry out ECOA's purposes
for motor vehicle dealers covered by Section 1029(a) of the Dodd-Frank
Act. 15 U.S.C. 1691b(f). In addition, ECOA Section 703 authorizes the
Board to issue regulations that contain such classifications,
differentiation, or other provisions, or that provide for such
adjustments and exceptions for any class of transactions, as in the
judgment of the Board are necessary or proper to effectuate the
purposes of ECOA, to prevent circumvention or evasion of ECOA, or to
facilitate or substantiate compliance with ECOA. Id. Finally, ECOA
Section 704B(g)(2) contains authority for exceptions or exemptions for
any class of financial institutions as deemed necessary or appropriate
to carry out the purposes of this section. 15 U.S.C. 1691c-2(g)(2).
Pursuant to this authority, the proposed rule excepts motor vehicle
dealers covered by Section 1029(a) of the Dodd-Frank Act temporarily
from the requirement to comply with ECOA Section 704B, until the
effective date of final rules that will be issued by the Board to
implement Section 704B. The Board believes that this exception is
necessary to effectuate the purposes of ECOA and facilitate compliance.
First, ECOA Section 704B states that the purpose is ``to facilitate
enforcement of fair lending laws and enable communities, governmental
entities, and creditors to identify business and community development
needs and opportunities of women-owned, minority-owned, and small
businesses.'' 15 U.S.C. 1691c-2(a). The Board believes that this
purpose is better served if there are detailed rules that prescribe the
method for collecting and reporting of data under Section 704B. The
collection of data in a uniform manner under such rules will enhance
data analysis and enforcement capabilities. In addition, the text of
ECOA Section 704B contemplates that regulations are necessary to
implement this provision by directing that financial institutions
compile and maintain the data ``in accordance with regulations of the
Bureau.'' \3\ Finally, implementing regulations will facilitate
compliance by providing guidance on how motor vehicle dealers can
comply with the statutory requirements in a manner that effectuates the
legislative purposes.
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\3\ See ECOA Section 704B(e)(1), 15 U.S.C. 1691c-2(e)(1) (``Each
financial institution shall compile and maintain, in accordance with
regulations of the Bureau, a record of the information provided by
any loan applicant * * *''); ECOA Section 704B(b), 15 U.S.C. 1691c-
2(b) (``Subject to the requirements of this section * * * the
financial institution shall * * * maintain a record of the responses
* * *'').
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III. Section-by-Section Analysis
Section 202.17 Data Collection for Credit Applications by Women-Owned,
Minority-Owned, or Small Businesses
17(a) Effective Date for Motor Vehicle Dealers
Section 704B of ECOA, as added by Section 1071 of the Dodd-Frank
Act, requires that financial institutions collect and report
information concerning credit applications made by women- or minority-
owned businesses and by small businesses. 15 U.S.C. 1691c-2. The term
``financial institution'' includes any entity that engages in any
financial activity. 15 U.S.C. 1691c-2(h)(1). Although the term
``financial activity'' is not defined in ECOA or the Dodd-Frank Act,
motor vehicle dealers covered by Section 1029(a) of the Dodd-Frank Act
may be financial institutions subject to the requirements of ECOA
Section 704B. This section of ECOA becomes effective on the designated
transfer date, which is July 21, 2011.
The proposed rule provides that no motor vehicle dealer covered by
Section 1029(a) of the Dodd-Frank Wall Street Reform and Consumer
Protection Act, 12 U.S.C. 5519(a), shall be required to comply with the
requirements of Section 704B of the Equal Credit Opportunity Act, 15
U.S.C. 1691c-2, until the effective date of final rules issued by the
Board to implement Section 704B of the Equal Credit Opportunity Act, 15
U.S.C. 1691c-2. Section 202.17(a). Moreover, the proposed rule provides
that the rule shall not be construed to affect the effective date of
Section 704B ECOA for any person other than a motor vehicle dealer
covered by Section 1029(a) of the Dodd-Frank Act.
IV. Paperwork Reduction Act
In accordance with the Paperwork Reduction Act (PRA) of 1995 (44
U.S.C. 3506; 5 CFR part 1320 Appendix A.1), the Board reviewed the
proposed rule under the authority delegated to the Board by the Office
of Management and Budget. The rule contains no collections of
information under the PRA. See 44 U.S.C. 3502(3). Accordingly, there is
no paperwork burden associated with the rule.
V. Regulatory Flexibility Analysis
The Regulatory Flexibility Act (RFA), 5 U.S.C. 601-612, requires an
agency to perform an initial and final regulatory flexibility analysis
on the impact a rule is expected to have on small entities. The Small
Business Administration (SBA) establishes size standards that define
which entities are small businesses for purposes of the RFA.\4\ The
size standard to be considered a small business is: $175 million or
less in assets for banks and other depository institutions; and $7
million or less in annual revenues for the majority of non-bank
entities that are likely to be subject to the final rules.
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\4\ U.S. Small Business Administration, Table of Small Business
Size Standards Matched to North American Industry Classification
System Codes, available at https://www.sba.gov/idc/groups/public/documents/sba_homepage/serv_sstd_tablepdf.pdf.
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Under Section 605(b) of the RFA, 5 U.S.C. 605(b), the initial
regulatory flexibility analysis otherwise required under Section 603 of
the RFA is not required if an agency certifies, along with a statement
providing the factual basis for such certification, that the rule will
not have a significant economic impact on a substantial number of small
entities. Based on its initial analysis and for the reasons stated
below, the Board believes that this proposed rule would
[[Page 36887]]
not have a significant economic impact on a substantial number of small
entities.
A. Statement of Reasons, Objectives, and Legal Basis for the Proposed
Rule
Section 704B of the Equal Credit Opportunity Act (ECOA), as added
by Section 1071 of the Dodd-Frank Wall Street Reform and Consumer
Protection Act (Dodd-Frank Act or Act), requires that financial
institutions collect and report information concerning credit
applications made by women- or minority-owned businesses and by small
businesses. ECOA Section 704B becomes effective on the date that
rulemaking authority for ECOA is transferred to the Consumer Financial
Protection Bureau (CFPB), which is July 21, 2011. Although the CFPB
will have the authority to issue rules to implement ECOA Section 704B
for most entities, the Board retains authority to issue rules for
certain motor vehicle dealers. This proposed rule excepts motor vehicle
dealers that are subject to the Board's jurisdiction from the
requirements of ECOA Section 704B temporarily, until the effective date
of final rules that will be issued by the Board to implement that
provision. The SUPPLEMENTARY INFORMATION above contains information on
the reasons, objectives and legal basis for the proposed rule.
B. Small Entities Affected by the Proposed Rule
The proposed rule applies to motor vehicle dealers covered by
Section 1029(a) of the Dodd-Frank Act.\5\ The total number of small
entities covered by the final rules is unknown, because the Board does
not have data on the number of small entities that are motor vehicle
dealers covered by Section 1029(a). Furthermore, it is not clear how
many motor vehicle dealers covered by Section 1029(a) receive credit
applications from women- or minority-owned business or small
businesses. Nevertheless, there are likely to be no small entities
affected by the final rule because the rule merely preserves the status
quo by granting a temporary exemption from the requirement to comply
with the statute when it takes effect on July 21, 2011.
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\5\ Section 1029(a) of the Dodd-Frank Act states: ``Except as
permitted in subsection (b), the Bureau may not exercise any
rulemaking * * * authority * * * over a motor vehicle dealer that is
predominantly engaged in the sale and servicing of motor vehicles,
the leasing and servicing of motor vehicles, or both.'' 12 U.S.C.
5519(a). Section 1029(b) of the Dodd-Frank Act states: ``Subsection
(a) shall not apply to any person, to the extent such person (1)
provides consumers with any services related to residential or
commercial mortgages or self-financing transaction involving real
property; (2) operates a line of business (A) that involves the
extension of retail credit or retail leases involving motor
vehicles; and (B) in which (i) the extension of retail credit or
retail leases are provided directly to consumers and (ii) the
contract governing such extension of retail credit or retail leases
is not routinely assigned to an unaffiliated third party finance or
leasing source; or (3) offers or provides a consumer financial
product or service not involving or related to the sale, financing,
leasing, rental, repair, refurbishment, maintenance, or other
servicing of motor vehicles, motor vehicle parts, or any related or
ancillary product or service.'' 12 U.S.C. 5519(b).
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C. Recordkeeping, Reporting, and Compliance Requirements
The proposed rule would not impose any new recordkeeping,
reporting, or compliance requirements. Instead, the proposed rule
temporarily would delay such requirements until the Board issues final
implementing regulations and the regulations become effective.
D. Identification of Duplicative, Overlapping, or Conflicting Federal
Regulations
The Board has not identified any Federal statutes or regulations
that would duplicate, overlap, or conflict with the proposed rule.
E. Significant Alternatives to the Proposed Revisions
The Board is not aware of any significant alternatives that would
further minimize any significant economic impact of the proposed rule
on small entities, but solicits comment on this approach.
List of Subjects in 12 CFR Part 202
Aged, Banks, Banking, Civil rights, Credit, Discrimination, Federal
Reserve System, Marital status discrimination, Penalties, Religious
discrimination, Reporting and recordkeeping requirements, Sex
discrimination.
Authority and Issuance
For the reasons set forth in the preamble, the Board proposes to
amend Regulation B, 12 CFR part 202, as follows:
PART 202--EQUAL CREDIT OPPORTUNITY (REGULATION B)
1. The authority citation for part 202 is revised to read as
follows:
Authority: 15 U.S.C. 1691-1691f; Pub. L. 111-203, 124 Stat.
1376.
2. Add Sec. 202.17 to read as follows:
Sec. 202.17 Data collection for credit applications by women-owned,
minority-owned, or small businesses.
(a) Effective date for motor vehicle dealers. No motor vehicle
dealer covered by section 1029(a) of the Dodd-Frank Wall Street Reform
and Consumer Protection Act, 12 U.S.C. 5519(a), shall be required to
comply with the requirements of section 704B of the Equal Credit
Opportunity Act, 15 U.S.C. 1691c-2, until the effective date of final
rules issued by the Board to implement section 704B of the Act, 15
U.S.C. 1691c-2. This paragraph shall not be construed to affect the
effective date of section 704B of the Act for any person other than a
motor vehicle dealer covered by section 1029(a) of the Dodd-Frank Wall
Street Reform and Consumer Protection Act.
By order of the Board of Governors of the Federal Reserve
System, June 17, 2011.
Jennifer J. Johnson,
Secretary of the Board.
[FR Doc. 2011-15654 Filed 6-22-11; 8:45 am]
BILLING CODE 6210-01-P