Padilla, Gillibrand, Torres Secure Inclusion of LGBTQ+ Small Business Data in Enforcement of Fair Lending Requirements
Provision Secured by Lawmakers Helps Ensure Nation’s 1.4 Million LGBTQ-Owned Business Are Treated Fairly in the Financial Sector
WASHINGTON, D.C. — U.S. Senators Alex Padilla (D-Calif.), Kirsten Gillibrand (D-N.Y.), and Representative Ritchie Torres (D-N.Y.-15) applauded the Consumer Financial Protection Bureau (CFPB) for requiring the collection of LGBTQ+ identifying data in their finalized rule on Section 1071 of the Dodd-Frank Act. The inclusion of this provision follows a February letter issued by the lawmakers urging the CFPB to improve data collection on lending to LBGTQ-owned businesses. The provision allows the CFPB to more accurately monitor trends of discrimination and helps ensure the nation’s 1.4 million LGBTQ-owned businesses are being treated fairly within the financial sector so that they can effectively compete, create opportunities, invest in employees, and uplift their communities.
According to a recent report, 35 percent of LGBTQ+ Americans reported that discrimination affected their financial well-being to a moderate or significant degree in the past year. Padilla led a letter, joined by Gillibrand and Torres, calling on CFPB Director Rohit Chopra to use his existing legal authority to include sexual orientation and gender identity as required data points for financial institutions to collect and report for the purpose of enforcing fair lending laws. The CFPB finalized the rule on March 30, including the data-reporting provision the lawmakers requested.
“This provision will help ensure that financial institutions meet the needs of the communities they serve and that LGBTQ-owned businesses do not face discrimination in our financial sector,” said Senator Padilla. “As we work to build an economy that works for all, we must ensure that all Americans, regardless of sexual orientation or gender identity, have equal access to capital.”
“I was delighted to see that the CFPB finalized a rule for self-reporting for LGBTQI+-owned businesses, which I have long pushed for through our LGBTQ Business Equal Credit Enforcement and Investment Act,” said Senator Kirsten Gillibrand. “This rule will allow for another necessary data point to enhance our federal fair lending laws, and I look forward to continuing to work with CFPB to ensure business lending remains fair for every American business.”
“From my days serving on the New York City Council to my time as the first openly gay Afro-Latino in Congress, I’ve been a staunch champion and fighter for creating a more equitable and more fair playing field for small businesses — particularly LGBTQI+ small businesses,” said U.S. Rep. Ritchie Torres. “With more than one million LGBTQI+ businesses contributing nearly $2 trillion to the American economy, we have a vested interest in strengthening and sustaining their access to credit and increasing transparency in small business lending to help them grow and thrive without fear of discrimination. I’m proud to join my colleagues in helping to advance this new rule at the CFPB in service of inclusive growth and economic opportunity regardless of who you love or how you identify.”
More information on the CFPB’s final rule is available here.
Full text of the letter previously sent by the lawmakers is available here and below:
Dear Director Chopra:
As the Consumer Financial Protection Bureau (CFPB) finalizes its rulemaking on Section 1071 of the Dodd-Frank Act, we write to urge you to use your existing legal authority to include sexual orientation and gender identity as required data points for financial institutions to collect and report for the purposes of enforcing fair lending laws.
We applaud the CFPB for issuing an interpretive rule in March 2021 to clarify that the prohibition against sex discrimination in the Equal Credit Opportunity Act (ECOA) and Regulation B, which implements ECOA, encompasses sexual orientation discrimination and gender identity discrimination, consistent with the Supreme Court’s ruling in Bostock v. Clayton County (2020). Unfortunately, discrimination on the basis of sexual orientation or gender identity remains all too common for LGBTQ+ Americans.
According to a recent report, 35 percent of LGBTQ+ Americans reported that discrimination affected their financial well-being to a moderate or significant degree in the past year. Ensuring accurate information surrounding lending patterns is critical toward monitoring trends of discrimination and ensuring our nation’s 1.4 million LGBTQ-owned businesses are treated fairly within the financial sector so they can effectively compete, create opportunities, invest in employees, and uplift their communities.
We believe the CFPB has the requisite legal authority to update these relevant data-reporting provisions within its final Section 1071 rule. In addition to the CFPB’s March 2021 interpretive rule, improving data collection on lending to LGBTQ-owned businesses is consistent with President Biden’s Executive Order 13988 titled, “Preventing and Combating Discrimination on the Basis of Gender Identity or Sexual Orientation,” which outlines the Administration’s view that existing laws prohibiting discrimination on the basis of sex also extend to “prohibit discrimination on the basis of gender identity or sexual orientation, so long as the laws do not contain sufficient indications to the contrary.”
Thank you for your attention to this matter. We look forward to continuing to work with you to address the needs of marginalized and underrepresented communities.