How well are banking institutions in New York serving minority and women-owned businesses?
New York State Department of Financial Services Superintendent Adrienne Harris announced a revised proposal on Wednesday to collect data that would allow the agency to evaluate how well banks are serving those communities.
It follows an expansion of the state’s Community Reinvestment Act. The proposal is also subject to a 45-day comment period.
The revised proposed regulation addresses comments received by DFS during a prior 60-day comment period. The revisions aim to minimize compliance burdens by ensuring the proposed language complements requirements in the Consumer Financial Protection Bureau’s proposed regulations for data collection on credit access for small and minority- and women-owned businesses.
The revisions included four key measures:
- Establishing how covered banking institutions should solicit, collect, store, and report the information relating to their provision of credit to minority- and women-owned businesses, for example, when requests for information should be made, and notifications to applicants of their right to refuse to offer information in response to such requests and that the information they provide may not be used for any discriminatory purpose;
- That to the extent feasible, underwriters should not have access to the information provided by applicants;
- The length of time the information gathered must be preserved by the covered institution; and
- A sample data collection form that covered institutions are permitted (but not required) to use.
“Banks must meet the needs of all consumers, including minority and women business owners, who historically have been denied fair access to credit,” said Superintendent of Financial Services Adrienne A. Harris. “This revised regulation ensures DFS has the necessary data to verify that banks are providing equitable access to financial products, creating a fairer financial system.”
Among its provisions, the proposed regulation details how institutions must collect and submit the necessary data to DFS while abiding by fair lending laws. Banks will be required to ask whether a business applying for a loan or credit is minority- or women-owned and report to the Department the details of applications, such as the date; type of credit applied for and amount; and whether the application was approved or denied; as well as whether the applicant is a minority-owned business, a women-owned business, or both; the size of the business; and the location of the business.