Proposed rules governing small business lending could threaten small business privacy and reduce access to capital.
That’s the warning Jonestown Bank & Trust Co. President & CEO Troy Peters sent to a congressional subcommittee Wednesday. Peters testified on behalf of the Pennsylvania Association of Community Bankers before the United States House of Representatives Small Business Committee and Subcommittee on Economic Growth, Tax, and Capital Access.
The subcommittee was chaired by U.S. Rep. Dan Meuser (R-PA Ninth District), who was named chairman last Feb. 3. Wednesday’s hearing focused on the Consumer Financial Protection Bureau’s (CFPB) proposed rule regulating data collection and reporting requirements of Section 1071 of the Dodd-Frank Act and the effects it will have on community banks’ ability to meet the unique needs of local small businesses.
Peters noted in his testimony that community banks are “different than large banking institutions that operate under a contrasting business model that focuses on large companies and loan sizes. We intimately know our markets and our customers.”
He added that small-business loans are not cookie cutter but are tailored to meet the specific business’ needs.
“Making application and loan data public as proposed will certainly be objectionable to my clients and is quite concerning,” Peters said. “By publicly displaying sensitive information like how much money they applied for, what the purpose of the loan is, and their revenue number, is not the kind of information they want or expect to be made public from a private transaction.”
Peters said such a disclosure could create a competitive disadvantage, such as revealing a planned business investment.
“Even worse, publishing information that a sole proprietor’s loan request was denied, in a small community like ours, is akin to posting a bounced check to the wall behind the store cash register,” said Peters. “The public humiliation shouts ‘Don’t do business with this person, they’re a deadbeat!’ I feel like this rule … will not be in the best interest of my clients and the communities that we serve.”
Meuser said that as community banks are vital to the state’s small businesses, he was pleased to have had the opportunity to invite a member of the Pennsylvania Association of Community Bankers to testify before his House Small Business subcommittee.
“I will continue to fight for community banks, and I appreciate Mr. Peters of Jonestown Bank & Trust expressing his concerns about the CFPB’s proposed rule on new data collection,” Meuser said. “I greatly valued his insight, as did the entire committee.
“We cannot allow burdensome federal regulations and mandates to harm banks that play such an important role in providing access to capital and supporting Pennsylvania’s small businesses.”d