Small business lending continues as a favorite topic with policymakers in Washington, DC. As the Trump Administration adds staff and nominates individuals for key policy positions, some key posts were vacated this month. Discussion on the future of the Consumer Financial Protection Bureau persist while the Bureau pushes forward with their efforts to obtain data on small business lending.
Access to Capital
The House Small Business Committees held a hearing focused on small business lending, where the new Deputy Administrator for Capital Access at the SBA testified on the 7A Program. In his opening statement to the Committee, Manger spoke extensive on access to capital for small business:
“The role that the SBA and the Office of Capital Access plays in our credit markets fills an important gap in the lending marketplace. Our agency aims to help small businesses obtain credit which is otherwise unavailable through conventional lending. As many of you know, often time’s entrepreneurs have the will and drive to succeed, but access to capital unfortunately proves to be an insurmountable hurdle. That is where we come in. Our programs have been helping small businesses get on their feet and grow for decades, but as we all know there is always room for improvement.”
Manger went on to discuss how the Office of Capital Access works to recruit more lenders for their programs, specifically 7(a). Read his testimony in its entirety here.
The Democrat Ranking Members of the House and Senate Small Business Committees sent letter to Treasury on CDFIs, referencing an American Banker article written by Mirador CEO, Trevor Dryer. Ranking Members Velazquez and Shaheen took a firm stance against the Trump Administrations proposed budget, more specifically the proposed elimination of new program funding for the CDFI fund.
“When small businesses are presented with sufficient credit opportunities, they are able to expand, create jobs, make positive impacts in their community, and add to the overall health of the economy. Unfortunately, many small businesses still face trouble accessing affordable credit opportunities which limits their ability to grow and succeed. As a recent article in the American Banker points out: “more than 70% of small businesses seek loans under $250,000, but these relatively small-dollar loans are often least cost-effective for banks to lend. Traditional lenders are often wary of loans due to high default risk and the significant cost of underwriting.”
The House Financial Services Committee passed the Financial Choice Act out of committee earlier this month, advancing legislation to the floor. The House could vote on it as early as next week.
Staff changes at OCC and impact on Fintech Charter process.
Paul Nash, Senior Deputy Comptroller and Chief of Staff to former Comptroller of the Currency Thomas J. Curry, will leave the agency effective May 26. Acting Comptroller of the Currency Keith Noreika said “I congratulate Paul on his tenure at the OCC and deeply appreciate the loyal, unconditional support he showed for Comptroller Curry…every chief executive should be so lucky have someone as dedicated and effective at getting things done as Paul has been.”
CFTC Fintech activity
The U.S. Commodity Futures Trading Commission recently launched a new initiative aimed at promoting FinTech Innovation. Details on the LabCFTC program were detailed in a press release put out by the CFTC earlier this month.
“LabCFTC is the agency’s focal point to promote FinTech innovation and fair competition by making the CFTC more accessible to FinTech innovators and serving as a platform to inform the CFTC’s understanding of new technologies. Further, LabCFTC will be an information source for the Commissioners and the CFTC staff on responsible innovation that may influence policy development. More information about LabCFTC can be found at www.cftc.gov/labcftc”
CFPB efforts around Sect. 1071
In mid-May the CFPB began early stages of considering how to best implement the Section 1071mandate from the Dodd-Frank Act and subsequently released an RFI regarding the small business lending market in a white paper titled “Key dimensions of the small business lending landscape”. The CFPB is accepting comments until June 14th.
SBA’s Small Business Week.
The Small Business Administration (SBA) hosted National Small Business Week from April 29-May 5th. SBA Administrator Linda McMahon kicked off the week by hosting an event in DC and traveled across the U.S. to take the opportunity to highlight the impact of outstanding entrepreneurs and small business owners.
What to Watch in June
Choice Act on the floor, more on 1071 (deadline for RFI approaching) and more CFPB restricting talk and more nominations from Trump.