| Comment # | Category | Date Comment Received | Commenter | Comment | Treasury Action |
| 1 | Attestation | 4/26/2023 | Banesco USA | I am the CFO of Banesco USA, an ECIP recipient bank based in Miami, FL. We have ~$3 billion assets as of 12/31/22. Our independent audit firm, Crowe LLP, has advised us that based on their professional audit standards, they would not be able to sign the FORM OF PROCESS AND CONTROLS ATTESTATION OF INDEPENDENT AUDITOR as it is currently drafted. In particular, I understand that they are concerned with certifying the processes used to generate the Supplemental Reports. We understand that our audit firm’s concern is shared by other external audit firms as well as the AICPA. We understand the AICPA can work with Treasury on an engagement that meets your objective and is able to be performed under AICPA attestation standards. In addition, the estimated burden for this form is listed as 10 minutes, but I understand from our auditors that this would take considerably longer and could potentially take in excess of 100 hours. We are concerned with the cost associated with the external auditor required procedures. While we understand Treasury’s objective, we question if such a cost is what was envisioned as part of the overall program. Lastly, we are concerned with the April 30, 2023 deadline, for which we will not be able to comply for the reasons above. We encourage the Treasury to delay the April 30, 2023 deadline until the matters above are addressed. | Based on comments recieved regarding the independent auditor attestation and potential options for Treasury to reasonably ensure that Recipients are providing accurate lending reporting, Treasury decided to waive the requirement for this attestation for FY 2022. Treasury will also consider providing additional guidance to recipients on the auditor attestation for future years. |
| 2 | Data Collection - Race and Ethnicity Data | 4/26/2023 | Sones & White Consultants | We wish first to comment on one major issue: the requirement to report every minority race represented on every loan. Our clinetsa are modifying their systems and putting procedures in place to be able to track their Minority lending going forward for ECIP purposes. They will be able to accurately report how man loans fit the definition of each of the Minority-related Qualified Lending categories, and in most cases, which Minority the borrower was. The exceptions, and the focus of our comment, are the relatively small number of loans that are made (1) to borrowers who self-report as multiple Minorities or (2) to more than one borrower when those borrowers identify as different Minorities. We request that Treasury accept a methodology for preparing the Quarterly Supplemental Reports that only tracks one Minority per loan. This request is reasonable becuase it represents a minute change to the reported data but saves the banks from needing expensive upgrades to their systems. Additional space in a bank's system is needed for each new data point required by the QSR Instructions. This additional space has to be obtained from the bank's Core Provider, and there is a limit to how many additional spaces can be purchased before a large system upgrade is necessary. Some additional spaces is unavoidable because of the complexity of hte QSR Instructions, but the utility of the collected data needs to be weight against the numbe rof additional spaces required to collect it. All data needed to accurately prepare the QSR can be collected in approximately 45 spaces in a bank's system. About 20 of these are additional spaces needed for new data points required by the QSR Instructions. This includes, among other data points, the ability to mark aloan as being made to a Minority Individual or Business, as well as what Minority the individual was or what Minoriity(ies) own a majority of the business. In order to account for all additional Minority borrowers on a loan, another 6 spaces would be necessary, one for each potential additional Minority on Treasury's list. This is an inordinate number of spaces, considering the fact that very few loans have more than one Minority represented on the loan. Again, every Minority loan will be captured under our proposal. The only data being lost would be the additional Minorities on the few loans where additional Minorities are represented. An additional merit of the above proposed methodology is that it can be approved by Treasury without changing the QSR Schedules. If Treasury determines that ECIP recipients must report when multiple Minorities were benefited by a single loan, we would propose the following as an alternative that would require only a small change: A new category be made that allows the ECIP Participaint to report loans that were made to "Multiple Minorities," meaning that either someone on the loan identified as more tha one Minority or that multiple individuals that identified as different Minorities were borrowers on the loan. This is similar to the new category in the Schedules published for the 30-day comment period, which allows the ECIP Participant to report that the loan was made to a business that was majority owned by multiple Minority individuals, rather than having to record each Miniroty that made up the majority ownership. |
Treasury added a column to Schedule C to allow for borrowers to be categorized as multi-racial. This category will include loans made to individuals who identify as two or more races or where there are co-borrowers of different races. |
| 3 | Data Collection - Race and Ethnicity Data | 4/26/2023 | Community Development Bankers Association | CUSTOMER DISCLOSURES CDBA strongly agrees with Treasury that “self-identification is the best method of collecting demographic data,” and we appreciate the explicit statement that “Participants are not expected to require their customers to provide demographic data.” However, we urge Treasury to ensure that ECIP participants are not penalized if borrowers opt not to disclose demographic information. We believe the absence of reporting fields that allow lenders to report the number and dollar amount of loans made to non-disclosing customers is an implicit penalty. The absence of clarifying fields allows for inferences that a lender is not meeting the needs of minority individuals, when in fact an individual borrower’s preference may have been for anonymity. By omitting fields to capture non-disclosing customers, the reporting forms suggest a non-disclosing-borrower must be a non-minority. CDBA recommends that Treasury amend the reporting forms to allow ECIP participants to disclose the number and dollar amount of loan transactions for which bank customers opted not to disclose their race or ethnicity. One way to accomplish this is to allow loans that cannot be established as being made to a Minority individual or Minority owned business should be reported as loans to borrowers who are “Not Known to Be Minorities” rather than “Not Minorities”. The absence of these data fields overlooks the privacy concerns and individual preferences of borrowers, and compromises the accuracy of data reported to Treasury. |
Loans where the borrower has not reported their demographic data and the demographic data cannot be identified through the other approved methods are not Qualified Lending under the People-based categories. Since the schedules only capture Qualified Lending, Treasury determined that it would be confusing to add columns to collect data on loans that are not Qualified Lending. Instead, Treasury has asked for estimates of loans for which the borrower has not reported demographic data in the narrative. |
| 4 | Attestation | 4/26/2023 | Community Development Bankers Association | INDEPENDENT AUDITOR ATTESTATION, PROCESSES AND CONTROLS Independent audit firms have informed ECIP participants that their firms cannot undertake reviews and provide the attestations required under Section 4(d)(ii) of the Securities Purchase Agreement until there is formal, published guidance on how to conduct that work. These firms have stated that without written guidance, they cannot determine whether the processes and controls used by banks are “satisfactory.” If ECIP participants cannot contract with independent auditors to complete these reviews and secure attestations, it will severely impact compliance. At this point, even if Treasury has guidance ready to issue, there is insufficient time for auditors to review, understand, and incorporate the guidance into operations before the deadline. We strongly urge Treasury to 1) provide the guidance required by independent audit firms in order to conduct the required reviews and provide attestations as soon as possible, and 2) provide a grace period, extending at least three months from the release of the guidance, to accommodate institutions that are currently unable to meet the requirement due to these circumstances. |
Based on comments recieved regarding the independent auditor attestation and potential options for Treasury to reasonably ensure that Recipients are providing accurate lending reporting, Treasury decided to waive the requirement for this attestation for FY 2022. Treasury will also consider providing additional guidance to recipients on the auditor attestation for future years. |
| 5 | Reporting Timeline and Grace Period | 4/26/2023 | Community Development Bankers Association | REPORTING TIMELINE AND GRACE PERIOD We request that Treasury provide clarification on the requirements to report individual demographic data. Specifically, while ECIP participants appreciate Treasury’s statement that “Treasury will not consider the QSR to be inaccurate or incomplete solely on the basis of a lack of demographic data,” we request a clear, unequivocal affirmation that this guidance constitutes a grace period for lenders to stand up collection and reporting systems. We further request that Treasury clarify precisely what data will be adequate up to, including, and after the quarter ending on June 30, 2024. We also request clarification on what will satisfy the requirement to submit narratives on plans to implement data collection systems and progress on implementing those plans. |
Treasury has reviewed the guidance provided in the instructions and does not believe further clarity is necessary. |
| 6 | Data Collection - Race and Ethnicity Data | 4/26/2023 | Community Development Bankers Association | DATA COLLECTION ECIP only requires participants to initiate the collection of demographic data, and not to retroactively collect demographic data for loans already made. While this is sensible, it creates a problem for lenders in that historical loans lacking demographic data may appear as though they were not directed to minorities, when in fact they may have been. CDBA recommends that for records dating from before the collection of demographic data, loans should be labeled as “demographic data not collected” and that such data be reported separately and not contribute towards calculating the proportion of minority borrowers served. In addition to explaining plans for implementing demographic data collection systems in the QSRs leading up to June, 2024, we request that geographic data be allowed to assess minority borrowers as is permitted by the CDFI Fund until the June, 2024 deadline. Permitting geographic data will allow lenders to estimate proportion of minority borrowers as they have historically, without omitting minority-lending estimates and falsely appearing as if they are not lending to minorities, at least until more advanced systems are in place. |
Loans where the borrower has not reported their demographic data and the demographic data cannot be identified through the other approved methods are not Qualified Lending under the People-based categories. Since the schedules only capture Qualified Lending, Treasury determined that it would be confusing to add columns to collect data on loans that are not Qualified Lending. Instead, Treasury has asked for estimates of loans for which the borrower has not reported demographic data in the narrative. |
| 7 | Collaboration with Regulatory Agencies | 4/26/2023 | Community Development Bankers Association | REGULATORY AGENCY GUIDANCE ON DATA COLLECTION & OUTREACH It is important for Treasury to facilitate an environment where it is safe for ECIP participants to collect customer demographic data without fear of regulatory agency reprisal. While the ECIP statute provides an exemption under ECOA, our members report widespread lack of knowledge by regulatory agency staff of such exemption. We have no knowledge of guidance being promulgated to field personnel to suggest that any institution collecting otherwise-prohibited data will not be cited for a Fair Lending or Regulation B violation. While we understand that Treasury has raised this issue with the regulatory agencies, we have no evidence that the agencies have provided examiners with consistent, needed guidance. To correct this situation, each of the respective bank regulatory agencies (i.e. Office of the Comptroller of the Currency, Federal Deposit Insurance Corporation, Board of Governors of the Federal Reserve System) needs to issue formal written guidance to examination teams conducting fair lending and ECOA examinations. We urge Treasury to continue to work with the Agencies to issue consistent guidance as soon as possible. Such guidance must be shared with ECIP participants such that they understand what they are, or are not, allowed to do. Regulator action is needed to ensure ECIP participants can collect this type of data with confidence, and we urge Treasury to continue to work energetically to ensure this guidance is issued. |
No changes to forms are instructions are necessary in response to this comment. Treasury has and will continue to communicate with the federal banking regulators and NCUA regarding the ECOA exemption in the ECIP statute, but Treasury has no authority to promulgate guidance on ECOA. Treasury will encourage Participants and interested parties to contact their regulators regarding concerns with examinations. |
| 8 | Instructions | 4/26/2023 | Community Development Bankers Association | LOAN PARTICIPATIONS & LOAN PURCHASES We commend Treasury for clearly stating in the QSR Instructions that loan purchases from ECIP Participants qualify as both Qualified and as Deep Impact Lending. However, we believe further clarification is required. The following two (2) statements, both from Page 9, appear to conflict with each other and potentially confuse related language when referring to the reporting of Qualified Lending and Deep Impact Lending. Specifically, the following language from “Loan Purchases and Participations” clearly states that purchases and participations in loans originated by ECIP Participants should be reported as Qualified Lending: [image excluded from chart presentation] However, language immediately following suggests that Treasury intends the opposite: [image excluded from chart presentation] Later, on Page 12, the following quote clearly states that loan purchases from ECIP Participants will qualify (in certain circumstances) for Deep Impact Lending, which tracks with the language establishing a baseline for such purchases so they may qualify at least as Qualified Lending: [image excluded from chart presentation] This important update will encourage ECIP participants to work with each other. However, whatever Treasury intends, the two affirmative statements are difficult to reconcile with the negative statement. This needs to be resolved to state clearly the circumstances under which lenders should report purchases and participations in loans originated by ECIP Participants either as Qualified Lending or as Deep Impact Lending. Further clarifications are also necessary to explain the eligibility period for loan purchases. Specifically, on Page 8, “Components of Lending Activity” provides that lending activity shall include purchases made “during the reporting period:” [image excluded from chart presentation] However, later, on Page 9, Treasury requires lenders to “Report the purchase price of loans or participations in loans during the reporting period that were made “on the day of origination:” [image excluded from chart presentation] We request that Treasury clarify whether these provisions mean an ECIP recipient must purchase the loan on the day of origination for it to qualify as lending activity, or whether it can be purchased any time during the reporting period. If the former is intended (day of origination only), we strongly urge Treasury to change the policy to the latter (during the reporting period). Restricting qualifying purchase to those made “on the day of origination” does not reflect industry best-practices and will discourage, rather than promote collaboration. |
Treasury will provide additional guidance to clarify the treatment of participations and purchases from other ECIP recipients |
| 9 | Instructions | 4/26/2023 | Community Development Bankers Association | BASELINE ADJUSTMENTS TIMELINE AND LOGISTICS CDBA acknowledges and thanks Treasury for issuing instructions for ISR reporting for institutions that have completed M&A activity. However, given the well-documented challenges facing depository institutions leading up to, during, and following M&A activity, the aggressive timeline to submit a consolidated ISR is concerning. As the instructions state, “if the Participant’s acquisition of another institution closed on April 15, 2025, submit an Initial Supplemental Report for the Acquired Institution covering the annual period ending on March 31, 2025.” We strongly urge Treasury to allow ECIP participants to request an extension on reporting in such circumstances to ensuring that the Agency gets the best and more accurate data possible. We also encourage Treasury to identify any other causes for baseline adjustment – especially community changes or participant actions. We believe Treasury has yet to address how future changes in economic or demographic indicators for counties or census tracts may affect the eligibility for interest rate reductions. CDBA recommends Treasury clarify how future changes in economic or demographic indicators for counties or census tracts may affect the eligibility for interest rate reductions. For example, census updates may affect the eligibility of geographic areas. It is unclear what will happen in the event that the economic conditions of a Persistent Poverty County improve and it no longer qualifies as such, but that county is part of the primary market of an ECIP participant. Likewise, as it pertains to participant actions, we recommend that Treasury issue guidance on the buying/opening and selling of branches and we encourage Treasury to specify under which circumstances these activities would impact the baseline. We ask that Treasury clarify if there is a threshold that would warrant a baseline adjustment (e.g., a percentage increase/decrease in lending activity), given that participants are likely to engage in several such activities over the course of ECIP, which may result in significant changes to the size and lending strategy of the participant. |
Treasury will work with institutions on a case by case basis to determine the need for exceptions to the general rule for when baseline data must be updated. Participants will be required to provide updated baseline data prior to being able to recieve credit for Qualified and Deep Impact Lending. As stated in the draft instructions, recipients have until the first full quarter after the Participant and the acquired institution have completed integrating data management systems, and no later than the first quarter that begins after the date that is nine months after the merger, acquisition or other business combination is completed to submit updated baseline data |
| 10 | Proxy data | 4/19/2023 | Mid Oregon Credit Union | 1.Requiring the collection of race and ethnicity data via borrower self-reporting on consumer loans is detrimental to ECIP recipients. Since 2003 lenders have been prohibited from inquiring about the race and ethnicity of applicants and borrowers of consumer loans. This was done to prohibit lenders from unlawfully discriminating against borrowers based on these factors. By requiring it only for ECIP recipients, consumers will be subjected to a practice that has been illegal for 20 years. This is likely to result in reputation risk and lost business for ECIP recipients, as ECIP recipient borrowers are presented with a data request that has been illegal for 20 years. This will be exacerbated for ECIP recipients who are the only recipient in their market. To mitigate this problem, the Treasury could eliminate the prohibition on use of proxies or other methods for race and ethnicity data or could make collecting this information optional for lenders. |
Treasury will not allow participating institutions to use proxy data for the purpose of identifying loans made to the People-based categories of Qualified Lending. Loans to Minority Communities are already counted under the Place-based categories of Qualified Lending. Treasury notes that the ECIP statute provides an exemption from ECOA for ECIP participants, which did not exist for the period of time that was used for the Initial Supplemental Report. As a result, use of proxy data was permitted for the Initial Supplemental Report. |
| 11 | Quarterly and Annual Reporting | 4/19/2023 | Mid Oregon Credit Union | 2.Treasury is creating a new stringent and cumbersome reporting process specific to ECIP. Lenders are accustomed to the data gathering and reporting requirements for HMDA and the normal CDFI reporting requirements. For ECIP recipients, Treasury has created a new requirement on consumer and business loans. Compliance with this requirement is far more cumbersome, dangerous, and costly to ECIP recipients than existing government reporting requirements. While ECIP recipients may utilize existing HMDA processes for certain residential real estate loans, those loans represent only a small fraction of ECIP reportable loans. Entire new processes and reporting systems will need to be created by ECIP recipients specific to the borrower self-reported race and ethnicity data. Furthermore, ECIP recipients have both a quarterly and annual reporting requirement. This means we will have to have separate data sets to comply with each frequency, even though reports due by April 30th of each year will include quarterly data from the current year for schedule A and B, and annual data from the prior year for schedules D and E. Furthermore, the requirement to identify multiple borrower loans in each category at least 1 borrower claims for race and ethnicity for schedules C and D, while only counting the loan once for Schedule A, is incredibly challenging with any type of automated reporting logic. To mitigate this problem, Treasury could utilize existing CDFI reporting standards for the ECIP program and unify the reporting into a single frequency for all schedules. |
Treasury considered harmonization of ECIP and CDFI Fund reporting definitions and timelines. Because the various programs have different requirements and objectives, complete alignment is not possible. |
| 12 | Proxy data | 4/19/2023 | Mid Oregon Credit Union | 3.Asking borrowers for race and ethnicity information on consumers loans exposes ECIP recipients to excessive legal and reputation risk. Very few people are aware of the obscure change included in the authorizing legislation that allowed the proposed collection of race and ethnicity data on consumer borrowers. As noted above, this practice has been illegal for 20 years. The authorizing legislation is very vague and there is no implementing guidance from Treasury on what type of data collection is permitted and which would continue to violate Regulation B. The lack of implementing regulations for 12 U.S.C. section 4703a(k) combined with the requirement to attempt to collect previously prohibited information from consumers exposes ECIP recipients to excessive legal risk. To mitigate this risk, Treasury should publish implementing regulations for this data collection process and should provide a model form and disclosure for consumers that will provide ECIP recipients with safe harbor. Collection of race and ethnicity data should not be required until this is complete. |
Treasury will collect data on Qualified Lending and Deep Impact Lending by race and ethnicity to enable effective and accurate assessment of the impact of the program, consistent with statutory requirements. Institutions that cannot meet the requirements for reporting may redeem the ECIP instruments consistent with the requirements in the ECIP legal agreements. Treasury has and will continue to communicate with the federal banking regulators and NCUA regarding the ECOA exemption in the ECIP statute, but Treasury has no authority to promulgate guidance on ECOA. Treasury does not prevent Participants from using signage, information sheets, or other methods of informing borrowers of the purpose of collection of race and ethnicity data to comply with program reporting requirements. |
| 13 | Data Collection - Race and Ethnicity Data | 4/19/2023 | Mid Oregon Credit Union | 4.Treasury has been deceptive in the implementation of this requirement and is not providing an option for lenders to exit the program rather than comply with the objectionable reporting rules. While the ECIP application and agreements contained notices that lenders would be required to collect additional demographic information on borrowers, only in the final instructions did the Treasury disclose their intent to require borrower reported, HMDA-type race and ethnicity data collection requirements on ECIP lenders. It is apparent from the fact that the statutory change that was made in the authorizing legislation that this was the intent from the beginning. I can tell you that Mid Oregon FCU would not have accepted the ECIP investment if the requirement to impose borrower reported, HMDA-type race and ethnicity data been clearly outlined as a condition of receiving funds. Furthermore, when I inquired with the ECIP program manager about the option to repay the ECIP funds rather than comply with this data collection requirement, he advised that “redemption is limited for the first five year(sic) under the terms of the agreement.” Treasury can address this problem by allowing ECIP recipients who do not wish to participate in the new data collection requirements the option to exit the program within the two year no-interest period, subject to whatever redemption requirements are imposed by the applicable regulator. Failure to allow program recipients to exit after imposition of such a significant change in the program requirements presents a strong basis for legal action against the Treasury by ECIP recipients to compel redemption. I strongly urge Treasury to allow lenders to exit from the program voluntarily. |
Treasury will collect data on Qualified Lending and Deep Impact Lending by race and ethnicity to enable effective and accurate assessment of the impact of the program, consistent with statutory requirements. Institutions that cannot meet the requirements for reporting may redeem the ECIP instruments consistent with the requirements in the ECIP legal agreements. Treasury published the draft forms and instructions for the QSR in April 2022, before any institutions received their funds. The draft forms and instructions noted that proxies would not be permitted. |
| 14 | Reporting Timeline and Grace Period | 4/19/2023 | Mid Oregon Credit Union | 5.Treasury has provided insufficient time to begin reporting, given the complexity of the requirements. The earliest possible date the forms and instructions could be finalized is approximately April 30, 2023. ECIP lenders will then have less than 60 days to submit no less than 3 quarters of activity. It is unlikely most lenders are willing to build the necessary systems to report this information until the rules are finalized. Expecting ECIP lenders to complete this reporting, including the various schedules in 60 days, is outrageous. For institutions that qualified for ECIP utilizing proxy data for income level, it will be necessary to reconstruct the data needed to complete the reporting. Since it has taken the Treasury nearly a year to promulgate the rules, is it not reasonable to allow ECIP lenders an equal amount of time to implement them? No lenders are subject to changes in interest rates until 2024 so there is no obvious reason for the due dates that were chosen. Treasury can address this issue by extending the due date or delinquent date for any reporting until at least 12/31/2023 or preferably until one year after the reporting rules are finalized.Treasury is creating a new stringent and cumbersome reporting process specific to ECIP. |
Treasury will not find a Participant non-compliant for overdue reporting if such reports are submitted by July 31, 2023. Treasury initially published the draft forms and instructions for the QSR in April 2022, and published the 30-day comment period version in March 2023. Treasury also held a webinar on the QSR noting that recipients should begin preparing to report in June 2023. |
| 15 | Proxy data | 4/19/2023 | Mid Oregon Credit Union | 6.There is a fundamental unfairness that results from changing the definition of qualification as a low-and-moderate income (LMI) borrower between the initial supplementary report (ISR) and the performance period. Many lenders qualified for ECIP and provided ISR data to establish a baseline of qualified lending using proxy data and including purchased loans, which were not excluded from the definition of lending in the ISR instructions. The rate charged on ECIP is based on the level of increase in qualified lending above the baseline. By eliminating the use of proxies to measure LMI status, establishing a more stringent definition of LMI, and excluding purchased loans from the definition of qualified lending, Treasury is decreasing the likelihood lenders will be able to increase lending enough to qualify for a rate reduction. In the case of Mid Oregon FCU, the elimination of purchased loans makes it impossible for us to qualify for a rate reduction through qualified lending. While other lenders will not know if this is case until they build the necessary reporting systems, the change in the method of determining qualified lending between the application process, ISR, and performance period is fundamentally unfair to lenders and represents an unfair and deceptive business practice by the Treasury. Treasury can address this issue by allowing ECIP lenders to report performance using the same standards that were allowed during the application and ISR periods. |
Treasury will not allow participating institutions to use proxy data for the purpose of identifying loans made to the People-based categories of Qualified Lending. Loans to Minority Communities are already counted under the Place-based categories of Qualified Lending. Treasury notes that the ECIP statute provides an exemption from ECOA for ECIP participants, which did not exist for the period of time that was used for the Initial Supplemental Report. As a result, use of proxy data was permitted for the Initial Supplemental Report. |
| 16 | Attestation | 4/19/2023 | Mid Oregon Credit Union | 7.The requirement for attestation by an Independent Auditor is expensive, unnecessary, and impossible to obtain without additional guidance from the Treasury. The CDFI Fund is proposing to require an independent audit certification of an ECIP lender’s reporting processes, separate and beyond the attestation that is required as part of the audited financial statements. Treasury has provided no guidance or standards to which the independent auditor would be attesting. Such an additional certification will be expensive, time consuming, and may not be available for some quarters. Most small ECIP recipients have at most one person who is responsible for preparing ECIP reports. In these cases, it will not be possible to have separation of duties and other controls to which an auditor would attest without an undue burden on the lender. In conjunction with the other onerous requirements, this requirement may result in a net cost to ECIP lenders from their participation in the program. This will result in less lending to underserved communities because the resources will be consumed by the reporting, audit, and attestation requirements. Like so many other requirements in the proposed rules, the CDFI Fund’s proposal for ECIP far exceeds the requirements of CDFI program reporting or HMDA reporting. To address this problem, the Treasury should accept the certification over controls that accompanies an ECIP recipient’s audited financial statements as sufficient to fulfill the attestation requirement. |
Based on comments recieved regarding the independent auditor attestation and potential options for Treasury to reasonably ensure that Recipients are providing accurate lending reporting, Treasury decided to waive the requirement for this attestation for FY 2022. Treasury will also consider providing additional guidance to recipients on the auditor attestation for future years. |
| 17 | Risk | 4/19/2023 | Mid Oregon Credit Union | Treasury should give consideration to its own legal exposure from utilizing a vague and undefined carve-out from the Equal Credit Opportunity Act without implementing regulations and a model form and disclosure for collection of the data requested. | Treasury does not prevent Participants from using signage, information sheets, or other methods of informing borrowers of the purpose of collection of race and ethnicity data to comply with program reporting requirements. Treasury has and will continue to communicate with the federal banking regulators and NCUA regarding the ECOA exemption in the ECIP statute, but Treasury has no authority to promulgate guidance on ECOA. |
| 18 | Process and Controls Certification | 4/17/2023 | Community FCU Guam | As a general matter, we understand Treasury's desire to have the management of each ECIP recipient provide attestations with respect to the processes and controls around the data collected and presented to the Treasury. And, we agree that such a certification is both appropriate and reasonable in light of the investment that Treasury has made in the subordinated debt of our credit union. As a practical matter, however, we are concerned that the current version of the Form of Process and Controls Attestation is rather inflexible. More specifically, we are concerned that the proposed version does not account for the fact that much of the information collected in connection with this program will (1) represent a new frontier for our staff and members alike, and (2) will be collected into systems which might not yet be fully equipped to store such information fields. As such, we expect a certain "learning curve" at our institution as our systems and our staff become fully acquainted with the new processes required by the ECIP investment. Additionally, we suggest a slightly revised form of the attestation which accounts for some appropriate reliance on systems and processes that might be supported by third party vendors and products. For example, as part of the reporting process, we expect to run the collected addresses of our borrowers through professional geocoding tools. Against such a reality, the current version of the "Process and Controls Certification" seems overly conclusory. We respectfully suggest that the Treasury consider changing the statement in paragraph 2 that "[t]he processes and controls used to generate the Supplemental Reports of the Recipient's fiscal year ending [ ], 20[ ] are satisfactory" to: "upon my reasonable investigation and to the best of my knowledge, the processes and controls used to generate the Supplemental Reports of the Recipient's fiscal year ending [ ], 20[ ] are satisfactory" (emphasis ours). Such a change would require our senior executives to affirmatively investigate the credit union's processes but would remain flexible enough to allow for reasonable reliance on the process of expert systems beyond our ability to certify with absolute certainty. | Treasury is not revising the language of the process and controls certification - we have determined this language is necessary for us to obtain the comfort we need on the accuracy of the supplemental reports. |
| 19 | Other | 4/26/2023 | Central Willamette Credit Union | Central Willamette Credit Union (CWCU) is a Low-Income, CDFI Credit Union serving over 38,000 members in Oregon. We strongly support CUNA’s recommendations on the changes needed to ensure ECIP is beneficial and effective for regulated credit unions like ours and the communities we serve. I am writing to express our strong opposition to the proposed Quarterly Supplemental Report for Emergency Capital Investment Program (ECIP) awards by the US Treasury CDFI Fund. We believe that this report, if implemented, will have a negative impact on the success of the ECIP and the small businesses and communities it aims to support. Furthermore, we are concerned about its potential conflict with the Regulation B Equal Credit Opportunity Act. While we understand the need for transparency and accountability in government programs, we believe that the proposed report goes beyond what is necessary and reasonable for ECIP recipients. In particular, the requirement for disclosure of individual borrower information in the report is concerning, as it may put small businesses at risk of financial harm or reputational damage. We are concerned that this requirement may also violate Regulation B of the Equal Credit Opportunity Act, which prohibits creditors from collecting information about the race, ethnicity, and other personal characteristics of credit applicants. We believe that the burdensome reporting requirements proposed in the Quarterly Supplemental Report will deter potential ECIP recipients from applying for the program in the first place. The time and resources required to comply with the reporting requirements may be too onerous for small businesses, CDFIs, and other potential ECIP recipients, ultimately limiting the program's impact and effectiveness. As a credit union, we are committed to promoting access to credit and financial services for all individuals and businesses, regardless of their race, ethnicity, or other personal characteristics. We believe that the proposed Quarterly Supplemental Report for ECIP awards may undermine this commitment and create unnecessary barriers for small businesses and communities that need access to capital and financial support. We urge you to reconsider the proposed Quarterly Supplemental Report for ECIP awards and work with stakeholders to find a more balanced approach to reporting and accountability for this important program. We believe that with some modifications, the ECIP can continue to be a vital tool for supporting small businesses and communities, while also ensuring appropriate oversight and transparency. |
Treasury will not allow participating institutions to use proxy data for the purpose of identifying loans made to the People-based categories of Qualified Lending. Loans to Minority Communities are already counted under the Place-based categories of Qualified Lending. Treasury guidance requires ECIP participants to collect on race and ethnicity data through voluntary borrower self-identification or other non-proxy methods. Borrowers do not have to provide race and ethnicity data and Participants are not non-compliant under such circumstances. Treasury notes that the ECIP statute provides an exemption from ECOA for ECIP participants, which did not exist for the period of time that was used for the Initial Supplemental Report. As a result, use of proxy data was permitted for the Initial Supplemental Report. |
| 20 | Data Collection - Auto Loans | 4/16/2023 | Security Credit Union | Thank you for the webinar today. Very informative and concerning. As an institution that relies greatly on building memberships and loans through indirect lending channels, I have major concerns on how data collection of race may impact members, non-members and dealer relations. Obviously there is a great deal of reputational risk in asking indirect applicants to supply race data when trying to secure an auto loan. Applicants might question: Will this impact the loan decision? What are they doing with that data? Why are they asking? Dealers might question: Why does this institution need the data? What potential impact will collecting this data have on my dealership? What is the applicant’s perspective when I’m gathering this data? All of these questions can lead to different outcomes. Feeling of unfair treatment by applicant, discrimination threats and litigation, less loans from concerned dealers, etc.. ECIP needs to rely more on Schedule D, Place-based Lending, than focusing on collecting what some consider very personal information. Our environment today is very legal system happy. There is constant news about racial profiling leading to poor outcomes. Why do you want to open that door for FI’s opting to use ECIP? This may make us susceptible to unnecessary lawsuits. I can confidently say our lending decisions have nothing to do with race, yet we are still accused of it today. Now if we have to ask for it and would’ve made the same determination without that info, the applicant may feel our decision was purely on race. It’s always perspective, but now we may have to spend money to protect ourselves. Then it comes back to reputational risk. The CFPB published the attached article titled, “Racial Discrimination in the Auto Loan Market”. This is just over two years old. I was happy to hear a good portion of the allowable rate bumping for higher reserve institutions pulling back on their practices when they got a lot of attention I believe back in 2015. However, here we are still hearing from a FI governing body about the impact of racial discrimination in lending. Now you want us to collect this data we haven’t needed all along to get better ECIP repayment terms? Has the impact on FI’s and dealerships been considered when stories like attached have already emanated? I see no good in collecting this sensitive info for an applicant by a dealer or credit union when there are other methods to support lending activities and initiatives. Like we already do today. |
Treasury will collect data on Qualified Lending and Deep Impact Lending by race and ethnicity to enable effective and accurate assessment of the impact of the program, consistent with statutory requirements. Institutions that cannot meet the requirements for reporting may redeem the ECIP instruments consistent with the requirements in the ECIP legal agreements. Treasury does not prevent Participants from using signage, information sheets, or other methods of informing borrowers of the purpose of collection of race and ethnicity data to comply with program reporting requirements. |
| 21 | Process and Controls Certification | 4/26/2023 | Hertiage Financial CU | As a general matter, we understand Treasury's desire to have the management of each ECIP recipient provide attestations with respect to the processes and controls around the data collected and presented to the Treasury. And, we agree that such a certification is both appropriate and reasonable in light of the investment that Treasury has made in the subordinated debt of our credit union. As a practical matter, however, we are concerned that the current version of the Form of Process and Controls Attestation is rather inflexible. More specifically, we are concerned that the proposed version does not account for the fact that much of the information collected in connection with this program will (1) represent a new frontier for our staff and members alike, and (2) will be collected into systems which might not yet be fully equipped to store such information fields. As such, we expect a certain "learning curve" at our institution as our systems and our staff become fully acquainted with the new processes required by the ECIP investment. | Treasury is not revising the language of the process and controls certification - we have determined this language is necessary for us to obtain the comfort we need on the accuracy of the supplemental reports. |
| 22 | Process and Controls Certification | 4/26/2023 | Hertiage Financial CU | [W]e suggest a slightly revised form of the attestation which accounts for some appropriate reliance on systems and processes that might be supported by third party vendors and products. For example, as part of the reporting process, we expect to run the collected addresses of our borrowers through professional geocoding tools. Against such a reality, the current version of the "Process and Controls Certification" seems overly conclusory. We respectfully suggest that the Treasury consider changing the statement in paragraph 2 that "[t]he processes and controls used to generate the Supplemental Reports of the Recipient's fiscal year ending [ ], 20[ ] are satisfactory" to: "upon my reasonable investigation and to the best of my knowledge, the processes and controls used to generate the Supplemental Reports of the Recipient's fiscal year ending [ ], 20[] are satisfactory" (emphasis ours). Such a change would require our senior executives to affirmatively investigate the credit union's processes but would remain flexible enough to allow for reasonable reliance on the process of expert systems beyond our ability to certify with absolute certainty. | Treasury is not revising the language of the process and controls certification - we have determined this language is necessary for us to obtain the comfort we need on the accuracy of the supplemental reports. |
| 23 | Process and Controls Certification | 4/14/2023 | Five Star Credit Union | As a general matter, we understand Treasury's desire to have the management of each ECIP recipient to the Treasury. And we agree that such a certification is both appropriate and reasonable considering the investment that Treasury has made in the subordinated debt of our credit union. As a practical matter, however, we are concerned that the current version of the Form of Process and Controls Attestation is rather inflexible. We are concerned that the proposed version does not account for the fact that much of the information collected in connection with this program will (1) represent a new frontier for our staff and members alike, and will (2) be collected into systems which might not yet be fully equipped to store such information fields. As such, we expect a certain "learning curve" at our institution as our systems and our staff become fully acquainted with the new processes required by the ECIP investment. We suggest a slightly revised form of the attestation which accounts for some appropriate reliance on systems and processes that might be supported by third party vendors and products. For example, as part of the reporting process, we expect to run the collected addresses of our borrowers through professional geocoding tools. We respectfully suggest that the Treasury consider changing the statement in paragraph 2 that "[t]he processes and controls used to generate the Supplemental Reports of the Recipient's fiscal year ending December 31, 2022 are satisfactory" to: "upon my reasonable investigation and to the best of my knowledge, the processes and controls used to generate the Supplemental Reports of the Recipient's fiscal year ending December 31, 2022 are satisfactory" (emphasis ours). Such a change would require our senior executives to affirmatively investigate the credit union's processes but would remain flexible enough to allow for reasonable reliance on the ptrocess of expert systems beyond our ability to certify with absoulte certainity. |
Treasury is not revising the language of the process and controls certification - we have determined this language is necessary for us to obtain the comfort we need on the accuracy of the supplemental reports. |
| 24 | Data Collection - Race and Ethnicity Data | 5/8/2023 | National Association of Federal Credit Unions | To mitigate unreasonable reporting burdens, reduce potential legal risks, and encourage efficient deployment of ECIP funds, Treasury should not require collection of demographic information for non-mortgage loans. At a minimum, Treasury should consider extending the grace period for reporting to align with the Consumer Financial Protection Bureau’s (CFPB) rule implementing small business lending data collection. General Comments Prior to the first round of ECIP awards, Treasury allowed applicants to assess lending to LMI and Other Targeted Populations using estimates and did not prescribe specific methodologies for completing the Initial Supplemental Report (ISR) or the initial application. Instead, Treasury instructed applicants using estimates to provide “supporting documentation that indicates which figures used for FY 2019 and FY 2020 are estimated and provide the methodology and information used to make such estimates.” At no point during the initial application stage was there any discussion of using sanctioned methodologies for collecting demographic information when completing Schedules A and B of the ISR. Discussion of demographic reporting requirements for ECIP participants also appeared in an FAQ; however, this document did contain specific methodological requirements or include any prohibition on the use of statistical proxies. The FAQ stated that “[r]eporting requirements will be set forth in the ECIP investment term sheets and investment agreements.” However, the term sheet provided to credit union ECIP applicants did not reference approved methodologies for collecting demographic information. A February 2022 draft of the proposed Initial Supplemental Report for insured depository institutions was similarly silent on the issue of using particular methodologies or the use of statistical proxies. Slides included in an accompanying webinar merely noted that “[a]pplicants are asked to provide a narrative explanation of the methodology used to generate the data in the report.” The use of specific, approved methodologies for collecting demographic information was not discussed until Treasury published a draft of the Quarterly Supplemental Report (QSR) data collection on June, 30 2022—approximately six months after announcing first round ECIP awards. The shift to more complex procedures to measure qualified lending relative to the first- round ISR methods for establishing baseline levels of qualified lending means that credit unions will need to shift attention away from the actual distribution of ECIP funds to target communities in order to develop new compliance programs. The more demanding reporting requirements also risk burdening credit unions with potential litigation risk that was never factored into initial ECIP strategies or cost estimates. |
Treasury will collect data on Qualified Lending and Deep Impact Lending by race and ethnicity to enable effective and accurate assessment of the impact of the program, consistent with statutory requirements. Institutions that cannot meet the requirements for reporting may redeem the ECIP instruments consistent with the requirements in the ECIP legal agreements. Treasury will not allow participating institutions to use proxy data for the purpose of identifying loans made to the People-based categories of Qualified Lending. Loans to Minority Communities are already counted under the Place-based categories of Qualified Lending. Treasury notes that the ECIP statute provides an exemption from ECOA for ECIP participants, which did not exist for the period of time that was used for the Initial Supplemental Report. As a result, use of proxy data was permitted for the Initial Supplemental Report. Treasury published the draft forms and instructions for the QSR in April 2022, before any institutions received their funds. The draft forms and instructions noted that proxies would not be permitted. |
| 25 | Risk | 5/8/2023 | National Association of Federal Credit Unions | Uncertainty regarding the scope of the ECOA safe harbor may increase exposure to potential legal risks when collecting QSR demographic information. Notwithstanding the Equal Credit Opportunity Act (ECOA), the ECIP statute specifically authorizes collection of demographic information from borrowers and applicants for the purpose of monitoring compliance with ECIP program requirements. While the ECIP provides a safe harbor under federal law, it does not address the potential applicability of state law equivalents of ECOA that may grant a private right of action. To the extent the CFPB is authorized to address potential inconsistencies between state laws and the parameters of ECIP reporting, Treasury should coordinate with the CFPB to ensure that credit unions are fully protected from potential legal liability when collecting demographic information to facilitate compliance with ECIP program requirements. Although the purpose of the ECIP is to encourage lending in low- and moderate-income communities, the collection of demographic information from borrowers presents inherent risks. Borrowers may be unaccustomed to sharing demographic information for non-mortgage loans. Additionally, confusion regarding the purpose of ECIP-related inquiries may invite unwarranted litigation. Treasury should address those risks with greater specificity and clarity before it compels additional information collection. |
Treasury will collect data on Qualified Lending and Deep Impact Lending by race and ethnicity to enable effective and accurate assessment of the impact of the program, consistent with statutory requirements. Institutions that cannot meet the requirements for reporting may redeem the ECIP instruments consistent with the requirements in the ECIP legal agreements. Treasury has and will continue to communicate with the federal banking regulators and NCUA regarding the ECOA exemption in the ECIP statute, but Treasury has no authority to promulgate guidance on ECOA. Treasury also has no ability to provide safe harbors under state law. |
| 26 | Data Collection - Race and Ethnicity Data | 5/8/2023 | National Association of Federal Credit Unions | Treasury must provide greater specificity with regard to acceptable methods for collecting demographic information and consider changes to the scope of reporting. Treasury has advised ECIP participants that demographic data can be supplemented with information collected for the purpose of Home Mortgage Disclosure Act (HMDA) compliance and CDFI reporting or certification requirements. However, Treasury has also warned participants that they may not rely on statistical proxies, “even if such proxies are accepted for the purposes of compliance with the Home Mortgage Disclosure Act or CDFI Fund certification or reporting requirements.” While HMDA data may be useful for assembling demographic information related to mortgage loans, other types of loans (e.g., indirect auto loans) do not have origination systems designed for collecting borrowers demographic data and developing such systems will correspond with significant costs. Even if developing data collection systems and procedures were feasible in the short period proposed by Treasury, lack of meaningful guidance would present its own separate challenge. In an FAQ, Treasury advises participants to rely on borrower self-identification but does not specify procedures for how to ask for the data and does not clarify what legal safe harbors (if any) can be extended to third parties who may also be involved in the information collection process. Developing procedures for collecting demographic information for all types of qualified lending listed in the QSR will require significant time, correspond with additional legal risk in the absence of more detailed guidance, and could result in serious operational disruption for credit union ECIP participants. Credit unions that applied for ECIP funding may not have factored these costs into their plans to deploy funds in LMI communities and this could ultimately impact the efficacy of the ECIP program as a whole. Although Treasury has proposed a grace period during which “Treasury will not consider the QSR to be inaccurate or incomplete solely on the basis of a lack of demographic data,” a period of approximately one year is unlikely to provide sufficient time for developing the data collection processes and methodologies needed. As a point of comparison, the CFPB’s final rule implementing small business lending data collection has given covered financial institutions a much longer period to develop procedures for gathering demographic information from small business owners and borrowers. A covered financial institution that originated at least 500 covered credit transactions for small businesses in each of calendar years 2022 and 2023 must comply with the CFPB’s final rule beginning April 1, 2025. The CFPB also recognizes that smaller entities may need additional time. Under the final rule, a covered financial institution that originated at least 100 covered credit transactions for small businesses in each of calendar years 2022 and 2023 has until January 1, 2026 to comply with the data collection rule. At a minimum, NAFCU recommends Treasury extend the QSR reporting grace period for non- HMDA mortgage loans to align with the longer end of the CFPB’s phased approach for implementing its small business data collection rule. A more appropriate solution, given the potential costs, disruption and risks discussed above, would be for Treasury to not require detailed reporting of demographic information for non-mortgage loans in the QSR. The use of HMDA and CDFI data coupled with reasonable estimates—similar to how first round ECIP participants completed the ISR—will provide adequate information to Treasury for assessing qualified lending activity, monitoring compliance, and ensuring that the goals of the ECIP program are met. |
Treasury will collect data on Qualified Lending and Deep Impact Lending by race and ethnicity to enable effective and accurate assessment of the impact of the program, consistent with statutory requirements. Institutions that cannot meet the requirements for reporting may redeem the ECIP instruments consistent with the requirements in the ECIP legal agreements. Since Treasury does not enforce ECOA, it cannot provide safe harbors from ECOA requirements. Treasury does not prevent recipients from developing forms, signage or other materials explaining the purpose of the data collection. Since ECIP recipients will only be required to submit QSRs for the first ten years after receiving investments, providing a longer grace period for recipients to develop data collection systems is not feasible. |
| 27 | Risk | 5/8/2023 | GoWest Credit Union Association | Exposure to legal ramifications [N] ew reporting requirements, specifically the requirements to report demographic information that is not based on proxies in Schedule C will expose credit unions to potential legal ramifications. It would be challenging and time-consuming to develop the documentation and the systems needed to collect demographic information about the recipients of ECIP funds while adhering to Regulation B., as issued by the Bureau of Consumer Financial Protection (Bureau). This is all the more risky without appropriate safe harbors and interagency communication and agreement on how this should be done. Treasury should work with the Bureau to make available instructions for collecting and reporting so that lenders can collect and store this information without violating fair lending laws. Further, Treasury should consult with the National Credit Union Administration (NCUA) to establish clear examiner expectations around these processes. |
Treasury will collect data on Qualified Lending and Deep Impact Lending by race and ethnicity to enable effective and accurate assessment of the impact of the program, consistent with statutory requirements. Institutions that cannot meet the requirements for reporting may redeem the ECIP instruments consistent with the requirements in the ECIP legal agreements. Treasury has and will continue to communicate with the federal banking regulators and NCUA regarding the ECOA exemption in the ECIP statute, but Treasury has no authority to promulgate guidance on ECOA. |
| 28 | Other | 5/8/2023 | GoWest Credit Union Association | Process Treasury should follow a more thorough rulemaking process for making substantive policy changes to grants, awards, and reporting. Public input processes under the Administrative Procedure Act (APA) are essential to understanding the landscape and the impacts a potential rule or change could have on the financial services community. Especially, how new requirements will impact small financial institutions like credit unions. We recommend that Treasury does not proceed with a policy change with such significant consequences without first going through a full rulemaking public comment process and fully considering the impacts of the proposed rule. If Treasury does move froward with changes to the current reporting, there must be reasonable time given to stakeholders to adequately respond. As this comment letter has detailed, any requests for information covered by Regulation Z without cross departmental safe harbors could have serious implications for credit unions. |
Treasury provided robust opportunities for comment under the Paperwork Reduction Act. The draft forms and instructions for the QSR were published in April 2022, before any institutions had received their funds. Institutions were provided a 60-day comment period to provide input on the initial draft, and Treasury received a large number of comments in response. Treasury then considered the comments and published a revised draft of the QSR forms and instructions for an additional 30-day comment period. |
| 31 | Reporting Timeline and Grace Period | 5/8/2023 | GoWest Credit Union Association | Reporting Time Treasury has provided insufficient time to begin reporting on these new quarterly reports, given the complexity of the requirements. Lenders need to have the time to build the necessary frameworks and systems to report this information. For institutions that used proxy data, changing the expectations of reporting detail after the award has been given ignores the additional work and time it will take to aggregate this data. These new reporting requirements should be implemented this year on a volunteer basis and become the expectation for all ECIP recipients in the following round of awards so that everyone understand the expectations and work before applying for the grant itself. At the very least, Treasury can address this issue by extending the due date or delinquent date for reporting after consulting with the Bureau and NCUA regarding reasonable timelines. |
Treasury will not find a Participant non-compliant for overdue reporting if such reports are submitted by July 31, 2023. Treasury initially published the draft forms and instructions for the QSR in April 2022, and published the 30-day comment period version in March 2023. Treasury also held a webinar on the QSR noting that recipients should begin preparing to report in June 2023. |
| 32 | Risk | 5/29/2023 | PrimeWay Federal Credit Union | Treasury severely underestimates the significance of its requirement to obtain actual demographic data on all loans and is ignoring the compliance, operational, litigation, and reputational risk associated with the requirement. The QSR instructions state that credit unions will be required to have “processes in place to attempt to collect the data necessary to complete all the fields” in the QSR, including customer’s demographic data. While credit unions do not have to require their members to self-identify their demographic data, if they refuse to do so, credit unions must collect the information using methods other than statistical proxies, regardless of whether these are currently required by the Home Mortgage Disclosure Act (HMDA) or the Community Development Financial Institution (CDFI) Fund. When credit unions have raised deeps concerns regarding the fair lending risk associated with collecting, storing, and reporting this actual demographic data, Treasury has pointed to the statutory provision that clarifies that collecting this information is not a violation of section 701(a)(1) of the Equal Credit Opportunity Act (ECOA). This carve out clarifies that collection is not a violation of ECOA and specifies that neither the Consumer Financial Protection Bureau (CFPB) nor any Federal agency can take adverse action related to that collection. This in and of itself does not provide credit unions with sufficient infrastructure to undertake collection without exposing the credit union to unacceptable levels of risk. |
Treasury will collect data on Qualified Lending and Deep Impact Lending by race and ethnicity to enable effective and accurate assessment of the impact of the program, consistent with statutory requirements. Institutions that cannot meet the requirements for reporting may redeem the ECIP instruments consistent with the requirements in the ECIP legal agreements. Treasury guidance requires ECIP participants to collect on race and ethnicity data through voluntary borrower self-identification or other non-proxy methods. Borrowers do not have to provide race and ethnicity data and Participants are not non-compliant under such circumstances. Treasury has and will continue to communicate with the federal banking regulators and NCUA regarding the ECOA exemption in the ECIP statute, but Treasury has no authority to promulgate guidance on ECOA. Treasury also has no ability to provide safe harbors under state law. |
| 33 | Risk | 5/9/2023 | PrimeWay Federal Credit Union | The statutory carve-out does not protect credit unions from private rights of action related to the information collection, nor does it address state law prohibitions on discrimination. These items ignore that the trust between the credit union and the membership could be severely strained when this type of demographic information is being solicited from a member. The underserved Hispanic community already has reservations about financial institutions and the requesting this type of data will only exacerbate the problem. The public perceptions of what has occurred especially after a loan is declined, even after relaxed underwriting standards are applied, could be extremely unfavorable to PrimeWay. Further, it is not at all clear that the federal carve out would protect credit unions against state laws that are parallel to ECOA and that directly make reference to exceptions in ECOA. Credit unions that attempted compliance with the requirement would likely be exposing themselves to significant litigation at the state and Federal level. Even if a credit union were to eventually succeed in winning that litigation, the risk of reputational damage, financial cost, and loss of member resources is simply not an acceptable risk. |
Treasury will collect data on Qualified Lending and Deep Impact Lending by race and ethnicity to enable effective and accurate assessment of the impact of the program, consistent with statutory requirements. Institutions that cannot meet the requirements for reporting may redeem the ECIP instruments consistent with the requirements in the ECIP legal agreements. Treasury has and will continue to communicate with the federal banking regulators and NCUA regarding the ECOA exemption in the ECIP statute, but Treasury has no authority to promulgate guidance on ECOA. Treasury also has no ability to provide safe harbors under state law. |
| 34 | Data Collection - Race and Ethnicity Data | 5/29/2023 | PrimeWay Federal Credit Union | Treasury has not provided the necessary regulatory infrastructure to permit ECIP- awardees to collect demographic data on loans not covered by HMDA. Furthermore, to require ECIP-awardees to collect these data would subject them to unfair competitive disadvantages in a marketplace where speed and convenience of processes is a major differentiator. Lenders are accustomed to the data gathering and reporting requirements for HMDA and the normal CDFI reporting requirements. Mortgage lending is the most extensively- regulated type of consumer lending and because of the significant training, structure, and protections in place, it is also the most expensive type of loan to obtain. While the statutory carve out cited by Treasury may provide some protection for credit unions that attempt to collect the information against regulatory action related to the act of collection itself, it does not address the compliant methods of collection, the appropriate language to use during collection, or how information should be appropriately stored or shared throughout the lending process. It is simply not reasonable for Treasury to assume that credit unions can simply “cross- apply” mortgage training, forms, and procedures to other types of loans. For example, Treasury has not provided any guidance in how credit unions should design compliant procedures related to processes like indirect auto lending. Indirect auto lending is exceedingly common among credit unions and a critical way to assist members in accessing affordable loans to ensure they have a car to get to work. When this was raised to Treasury, credit unions were told to call Treasury directly to obtain information on a case-by-case basis. This is not sufficient. In an indirect lending context, dealers have the ability to decline to work with lenders. Where credit unions may be seen to be collecting information improperly or requiring dealers to implement processes that they are not comfortable with, they may simply be dropped. In order to reasonably implement this requirement, credit unions would need guidance from the CFPB to be established and broadly published so that lending partners, like dealers, are able to establish their own requirements and manage their own levels of risk associated with doing business with ECIP-awardee credit unions. It is simply not reasonable for Treasury to assume that credit unions can simply “cross-apply” mortgage training, forms, and procedures to other types of loans. For example, Treasury has not provided any guidance in how credit unions should design compliant procedures related to processes like indirect auto lending. Indirect auto lending is exceedingly common among credit unions and a critical way to assist members in accessing affordable loans to ensure they have a car to get to work. When this was raised to Treasury, credit unions were told to call Treasury directly to obtain information on a case-by-case basis. This is not sufficient. In an indirect lending context, dealers have the ability to decline to work with lenders. |
Treasury will collect data on Qualified Lending and Deep Impact Lending by race and ethnicity to enable effective and accurate assessment of the impact of the program, consistent with statutory requirements. Institutions that cannot meet the requirements for reporting may redeem the ECIP instruments consistent with the requirements in the ECIP legal agreements. |
| 35 | Burden | 5/29/2023 | PrimeWay Federal Credit Union | Treasury severely underestimates the time, cost, and burden associated with implementing these requirements Our anticipated efforts of time and resources required to perform this data gathering, greatly affects our ability to assign our staff to address the needs of the membership we are trying to help. Our mission to service this community is perversely affected by deploying our limited employees in gathering information about the very people we are attempting to serve. None of the funds obtained through ECIP are used to increase staff so the credit union must allocate employees where the most benefit to the membership is gained. We believe that to be directly working with the members of the community and not performing administrative tasks. If a credit union were to ignore the litigation, compliance, and reputational risk associated with implementing these requirements, the operational burden associated with doing so would be enormous. PrimeWay invested significant time and resources into developing its HMDA compliance program. This included infrastructure, form design, legal review, training, and ongoing quality review. We have a small team of highly trained employees who carefully review applications to ensure full compliance with HMDA and Regulation C, while maintaining compliance with ECOA. It would be financially impossible to re‐create those processes with the much larger team responsible for originating non‐real estate secured consumer loans. Credit unions often use a different loan origination system (LOS) for consumer and open- ended loans compared to their mortgage lending. Collecting, storing, and reporting on this information for all loans would likely involve an overhaul of these systems, potentially at tremendous cost to credit unions. It is common for CFPB-implemented regulation to drive the market and the creation of new software platforms. However, the market for those solutions to meet compliance obligations is very large and the guidance provided by Bureau rules is very detailed. Given the small number of ECIP-awardees who would be obligated to comply with these requirements, the lack of guidance provided in how to implement the requirements, and the breadth of products that would need to be covered, it seems likely that the number of software solutions created to address Treasury’s requirements would be small and the cost of these solutions would be very expensive. |
While the commenter indicated that Treasury underestimated the burden associated with reporting, it did not provide information to allow for the burden estimates to be considered for revision. Treasury will collect data on Qualified Lending and Deep Impact Lending by race and ethnicity to enable effective and accurate assessment of the impact of the program, consistent with statutory requirements. Institutions that cannot meet the requirements for reporting may redeem the ECIP instruments consistent with the requirements in the ECIP legal agreements. |
| 36 | Data Collection - Auto Loans | 5/9/2023 | PrimeWay Federal Credit Union | Implementation of Treasury’s requirement would harm and confuse consumers and poses risk to credit unions’ reputations. Because mortgage lending is the most extensively-regulated type of consumer lending and because of the significant training, structure, and protections in place, it is also the most expensive type of loan to obtain. Creating parallel frameworks for other types of loans will directly increase the cost associated with those loans. Further, these requirements may mean credit unions are less competitive in their market, as is likely to happen in the indirect auto lending context as described above. Treasury’s requirements would apply to only a small number of individual credit unions, many of which may be the only lender in their market requesting this information on non- mortgage loans. If a consumer asks another lender why the credit union requested this information, it is likely the consumer will be told that they were being discriminated against based on their race or ethnicity. This is simply an unacceptable outcome for credit unions. The regulatory framework for obtaining data under HMDA makes these requests ubiquitous and legitimizes them in the request of consumers. Treasury is requiring ECIP-awardee credit unions to proceed without those protections or any consumer- facing messaging. |
Treasury will collect data on Qualified Lending and Deep Impact Lending by race and ethnicity to enable effective and accurate assessment of the impact of the program, consistent with statutory requirements.. Institutions that cannot meet the requirements for reporting may redeem the ECIP instruments consistent with the requirements in the ECIP legal agreements. Treasury does not prevent Participants from using signage, information sheets, or other methods of informing borrowers of the purpose of collection of race and ethnicity data to comply with program reporting requirements. |
| 37 | Other | 5/9/2023 | PrimeWay Federal Credit Union | Basic fairness requires that Treasury should have been clear about this requirement prior to allowing credit unions to execute agreements and accept ECIP award funds. Neither the Initial Supplemental Report nor the Securities Purchase Agreement indicated the ECIP-awardees may be required to implement processes to collect actual demographic data on all loans without the use of proxies. The use of proxies was clearly contemplated in the Initial Supplemental Report and credit unions have absolutely no indication this would be required. This requirement is incredibly burdensome, and implementation is excessively risky. Many credit unions would have declined to apply for or accept the funds if this requirement had been disclosed prior to the publication of the proposed QSR. Obligating credit unions to accept this level of risk without notice once they have already taken the money and endangering their CDFI designation if they fail to comply is not reasonable. This fails as a measure of basic fairness in dealing with ECIP-awardees. |
Treasury will collect data on Qualified Lending and Deep Impact Lending by race and ethnicity to enable effective and accurate assessment of the impact of the program, consistent with statutory requirements. Institutions that cannot meet the requirements for reporting may redeem the ECIP instruments consistent with the requirements in the ECIP legal agreements. Treasury will not allow participating institutions to use proxy data for the purpose of identifying loans made to the People-based categories of Qualified Lending. Loans to Minority Communities are already counted under the Place-based categories of Qualified Lending. Treasury notes that the ECIP statute provides an exemption from ECOA for ECIP participants, which did not exist for the period of time that was used for the Initial Supplemental Report. As a result, use of proxy data was permitted for the Initial Supplemental Report. Participation in the ECIP is not a condition of CDFI Certification. Treasury published the draft forms and instructions for the QSR in April 2022, before any institutions received their funds. The draft forms and instructions noted that proxies would not be permitted. |
| 38 | Other | 5/9/2023 | PrimeWay Federal Credit Union | Treasury should make the requirement to collect demographic data on non-HMDA loans voluntary. For all the reasons previously stated, Treasury should make the requirement to collect actual demographic data on non-HMDA loans and report that data in Schedule C voluntary. If Treasury wants demographic data on loans of all types, it should accept proxy data in lieu of actual data. |
Treasury will collect data on Qualified Lending and Deep Impact Lending by race and ethnicity to enable statutory-driven program reporting requirements. Treasury will not allow participating institutions to use proxy data for the purpose of identifying loans made to the People-based categories of Qualified Lending. Loans to Minority Communities are already counted under the Place-based categories of Qualified Lending. Treasury notes that the ECIP statute provides an exemption from ECOA for ECIP participants, which did not exist for the period of time that was used for the Initial Supplemental Report. As a result, use of proxy data was permitted for the Initial Supplemental Report. |
| 39 | Other | 5/8/2023 | Comeau, Amie | Thank you for your time and attention. I have been a volunteer caregiver for my aging parents since 2015. I am now homeless. I do not have access to internet or phone with any regularity. Can you assist with financing for housing? The emergency capital investment program has no support structure for lack of access to communication. | This comment does not address reporting requirements under the program. |
| 40 | Risk | 5/8/2023 | Dakota Credit Union Association | The statutory carve-out does not protect credit unions from private rights of action related to the information collection, nor does it address state law prohibitions on discrimination. The statutory carve out cited by Treasury specifically protects credit unions from adverse action related to the collection by the CFPB or the National Credit Union Administration (NCUA) which oversees credit union consumer compliance as part of its oversight examinations. However, the statute does not provide credit unions with protection against individual or class action lawsuits brought under ECOA’s private right of action. Further, it is not at all clear that the federal carve out would protect credit unions against state laws that are parallel to ECOA and that directly make reference to exceptions in ECOA. Credit unions that attempted compliance with the requirement would likely be exposing themselves to significant litigation at the state and Federal level. Even if a credit union were to eventually succeed in winning that litigation, the risk of reputational damage, financial cost, and loss of member resources is simply not an acceptable risk. |
Treasury will collect data on Qualified Lending and Deep Impact Lending by race and ethnicity to enable statutory-driven program reporting requirements. Institutions that cannot meet the requirements for reporting may redeem the ECIP instruments consistent with the requirements in the ECIP legal agreements. Treasury has and will continue to communicate with the federal banking regulators and NCUA regarding the ECOA exemption in the ECIP statute, but Treasury has no authority to promulgate guidance on ECOA. Treasury also has no ability to provide safe harbors under state law. |
| 41 | Risk | 5/8/2023 | Dakota Credit Union Association | Sisseton-Wahpeton Federal Credit Union, located in South Dakota is an awardee of $1,000,000 in ECIP investment funds. This small credit union with $5 million in assets and two full time employees is located in Agency Village, SD and serves members and employees of the Sisseton-Wahpeton Sioux tribe, employees of area schools, Indian Health Service, and Bureau of Indian Affairs. The proposed reporting would be overly burdensome and redirect critical staff and resources that is needed elsewhere to serve their membership and community. Treasury severely underestimates the significance of its requirement to obtain actual demographic data on all loans and is ignoring the compliance, operational, litigation, and reputational risk associated with the requirement. The QSR instructions state that credit unions will be required to have “processes in place to attempt to collect the data necessary to complete all the fields” in the QSR, including customer’s demographic data. While credit unions do not have to require their members to self-identify their demographic data, if they refuse to do so, credit unions must collect the information using methods other than statistical proxies, regardless of whether these are currently required by the Home Mortgage Disclosure Act (HMDA) or the Community Development Financial Institution (CDFI) Fund. When credit unions have raised deeps concerns regarding the fair lending risk associated with collecting, storing, and reporting this actual demographic data, Treasury has pointed to the statutory provision that clarifies that collecting this information is not a violation of section 701(a)(1) of the Equal Credit Opportunity Act (ECOA).3 This carve out clarifies that collection is not a violation of ECOA and specifies that neither the Consumer Financial Protection Bureau (CFPB) nor any Federal agency can take adverse action related to that collection. This in and of itself does not provide credit unions with sufficient infrastructure to undertake collection without exposing the credit union to unacceptable levels of risk. |
Treasury will collect data on Qualified Lending and Deep Impact Lending by race and ethnicity to enable statutory-driven program reporting requirements. Institutions that cannot meet the requirements for reporting may redeem the ECIP instruments consistent with the requirements in the ECIP legal agreements. Treasury has and will continue to communicate with the federal banking regulators and NCUA regarding the ECOA exemption in the ECIP statute, but Treasury has no authority to promulgate guidance on ECOA. Treasury also has no ability to provide safe harbors under state law. |
| 42 | Risk | 5/8/2023 | Dakota Credit Union Association | Treasury has not provided the necessary regulatory infrastructure to permit ECIP-awardees to collect demographic data on loans not covered by HMDA. Lenders are accustomed to the data gathering and reporting requirements for HMDA and the normal CDFI reporting requirements. Mortgage lending is the most extensively regulated type of consumer lending and because of the significant training, structure, and protections in place, it is also the most expensive type of loan to obtain. While the statutory carve out cited by Treasury may provide some protection for credit unions that attempt to collect the information against regulatory action related to the act of collection itself, it does not address the compliant methods of collection, the appropriate language to use during collection, or how information should be appropriately stored or shared throughout the lending process. It is simply not reasonable for Treasury to assume that credit unions can simply “cross-apply” mortgage training, forms, and procedures to other types of loans. For example, Treasury has not provided any guidance in how credit unions should design compliant procedures related to processes like indirect auto lending. Indirect auto lending is exceedingly common among credit unions and a critical way to assist members in accessing affordable loans to ensure they have a car to get to work. When this was raised to Treasury, credit unions were told to call Treasury directly to obtain information on a case-by-case basis. This is not sufficient. In an indirect lending context, dealers have the ability to decline to work with lenders. Where credit unions may be seen to be collecting information improperly or requiring dealers to implement processes that they are not comfortable with, they may simply be dropped. In order to reasonably implement this requirement, credit unions would need guidance from the CFPB to be established and broadly published so that lending partners, like dealers, are able to establish their own requirements and manage their own levels of risk associated with doing business with ECIP-awardee credit unions. |
Treasury will collect data on Qualified Lending and Deep Impact Lending by race and ethnicity to enable statutory-driven program reporting requirements. Institutions that cannot meet the requirements for reporting may redeem the ECIP instruments consistent with the requirements in the ECIP legal agreements. Treasury has and will continue to communicate with the federal banking regulators and NCUA regarding the ECOA exemption in the ECIP statute, but Treasury has no authority to promulgate guidance on ECOA. Treasury also has no ability to provide safe harbors under state law. |
| 43 | Risk | 5/8/2023 | Dakota Credit Union Association | Treasury severely underestimates the time, cost, and burden associated with implementing these requirements. If a credit union were to ignore the litigation, compliance, and reputational risk associated with implementing these requirements, the operational burden associated with doing so would be enormous. In addition to system requirements, credit unions would also need to conduct highly sensitive and intensive training on how to safely obtain this information for an extremely broad class of employees. Credit unions would need to implement new forms, processes, and procedures across all loan product lines, including those that involve third parties. Additionally, as the credit union would now be storing significant quantities of highly sensitive information, they would likely also need to implement additional protection for the safety and confidentiality of this information, requiring significant changes to their privacy and information security policies. Credit unions would have to design all these structures themselves and obtain legal opinions regarding their compliance as there is no guidance from the CFPB or NCUA regarding what is sufficient. Credit unions estimate that these changes could take between 5 and 10 years, depending on individual credit union’s size, sophistication, and the loan products offered. |
Treasury will collect data on Qualified Lending and Deep Impact Lending by race and ethnicity to enable statutory-driven program reporting requirements. Institutions that cannot meet the requirements for reporting may redeem the ECIP instruments consistent with the requirements in the ECIP legal agreements. Since ECIP recipients will only be required to submit QSRs for the first ten years after receiving investments, providing a longer grace period for recipients to develop data collection systems is not feasible. |
| 44 | Risk | 5/8/2023 | Dakota Credit Union Association | Implementation of Treasury’s requirement would harm and confuse consumers and poses risk to credit unions’ reputations. Because mortgage lending is the most extensively regulated type of consumer lending and because of the significant training, structure, and protections in place, it is also the most expensive type of loan to obtain. Creating parallel frameworks for other types of loans will directly increase the cost associated with those loans. Further, these requirements may mean credit unions are less competitive in their market, as is likely to happen in the indirect auto lending context as described above. When consumers obtain a mortgage loan, they experience the same forms and inquiries regarding their race and ethnicity information at every lender they speak with. Many credit unions report that consumers are sometimes put off by the request initially. Seeing formal regulatory language, posted HMDA signs, and having the same experience across all lenders leads consumers to understand and accept that these inquiries are Federal requirements and not driven by an intention to discriminate. Treasury’s requirements would apply to only a small number of individual credit unions, many of which may be the only lender in their market requesting this information on non-mortgage loans. If a consumer asks another lender why the credit union requested this information, it is likely the consumer will be told that they were being discriminated against based on their race or ethnicity. This is simply an unacceptable outcome for credit unions. The regulatory framework for obtaining data under HMDA makes these requests ubiquitous and legitimizes them in the request of consumers. Treasury is requiring ECIP-awardee credit unions to proceed without those protections or any consumer-facing messaging. |
Treasury will collect data on Qualified Lending and Deep Impact Lending by race and ethnicity to enable statutory-driven program reporting requirements. Institutions that cannot meet the requirements for reporting may redeem the ECIP instruments consistent with the requirements in the ECIP legal agreements. Treasury does not prevent Participants from using signage, information sheets, or other methods of informing borrowers of the purpose of collection of race and ethnicity data to comply with program reporting requirements. |
| 45 | Risk | 5/8/2023 | Dakota Credit Union Association | Basic fairness requires that Treasury should have been clear about this requirement prior to allowing credit unions to execute agreements and accept ECIP award funds. Neither the Initial Supplemental Report nor the Securities Purchase Agreement indicated the ECIP awardees may be required to implement processes to collect actual demographic data on all loans without the use of proxies. The use of proxies was clearly contemplated in the Initial Supplemental Report and credit unions have absolutely no indication this would be required. This requirement is incredibly burdensome, and implementation is excessively risky. Many credit unions would have declined to apply for or accept the funds if this requirement had been disclosed prior to the publication of the proposed QSR. Obligating credit unions to accept this level of risk without notice once they have already taken the money and endangering their CDFI designation if they fail to comply is not reasonable. This fails as a measure of basic fairness in dealing with ECIP awardees. |
Treasury will collect data on Qualified Lending and Deep Impact Lending by race and ethnicity to enable statutory-driven program reporting requirements. Institutions that cannot meet the requirements for reporting may redeem the ECIP instruments consistent with the requirements in the ECIP legal agreements. Participation in the ECIP is not a condition of CDFI Certification. Treasury published the draft forms and instructions for the QSR in April 2022, before any institutions received their funds. The draft forms and instructions noted that proxies would not be permitted. |
| 46 | Proxy data | 5/8/2023 | Dakota Credit Union Association | Treasury should make the requirement to collect demographic data on non-HMDA loans voluntary. For all the reasons previously stated, Treasury should make the requirement to collect actual demographic data on non-HMDA loans and report that data in Schedule C voluntary. If Treasury wants demographic data on loans of all types, it should accept proxy data in lieu of actual data. If Treasury wishes to pursue the goal of obtaining actual demographic data on all loans, it should work with the CFPB and NCUA to provide reasonable compliance guidance and examination expectations for ECIP-awardee credit unions so that credit unions can illustrate to their examiners, auditors, and membership that they are meeting their compliance obligations and not unduly exposing the credit union to litigation and reputational risk. Further, Treasury and the CFPB should jointly undertake a consumer-facing messaging campaign to make consumers aware that this information may be requested for their benefit and protection in order to provide reasonable assurances to consumers that ECIP awardee credit unions are not discriminating against them in complying with the requirement. Finally, once these basic foundations have been laid, Treasury should permit a reasonable implementation period after the publication of sufficient guidance to allow for the establishment of third-party solutions, vendor due diligence, and implementation and training. The minimum implementation period should be three years. |
Treasury will collect data on Qualified Lending and Deep Impact Lending by race and ethnicity to enable statutory-driven program reporting requirements. Institutions that cannot meet the requirements for reporting may redeem the ECIP instruments consistent with the requirements in the ECIP legal agreements. Treasury will not allow participating institutions to use proxy data for the purpose of identifying loans made to the People-based categories of Qualified Lending. Loans to Minority Communities are already counted under the Place-based categories of Qualified Lending. Treasury notes that the ECIP statute provides an exemption from ECOA for ECIP participants, which did not exist for the period of time that was used for the Initial Supplemental Report. As a result, use of proxy data was permitted for the Initial Supplemental Report. Treasury does not prevent Participants from using signage, information sheets, or other methods of informing borrowers of the purpose of collection of race and ethnicity data to comply with program reporting requirements. Treasury has and will continue to communicate with the federal banking regulators and NCUA regarding the ECOA exemption in the ECIP statute, but Treasury has no authority to promulgate guidance on ECOA. Since ECIP recipients will only be required to submit QSRs for the first ten years after receiving investments, providing a longer grace period for recipients to develop data collection systems is not feasible. |
| 47 | Data Collection - Race and Ethnicity Data | 5/8/2023 | Credit Union National Association | The Credit Union National Association (“CUNA”) represents America’s credit unions and their more than 135 million members. On behalf of our members, we are writing to express our deep concern regarding certain provisions in the proposed Quarterly Supplemental Report (QSR). CUNA applauds the Emergency Capital Investment Program (ECIP) and its goals to encourage investment in small businesses and low-income and underserved communities. CUNA welcomes Treasury’s efforts to assess the success of the ECIP through reporting, however, if the QSR is finalized as proposed, the burden and risks posed to ECIP-awardee credit unions far outweighs the benefits of the data sought by Treasury and, for some, the benefits of the ECIP award itself. CUNA urges Treasury in the strongest possible terms to not finalize a requirement for ECIP-awardee credit unions to implement the collection, storage, and reporting of actual demographic data on all loans. | Treasury will collect data on Qualified Lending and Deep Impact Lending by race and ethnicity to enable statutory-driven program reporting requirements. |
| 48 | Data Collection - Race and Ethnicity Data | 5/8/2023 | Credit Union National Association | General Comments Most concerningly, the QSR Instructions would require credit unions to have “processes in place to attempt to collect the data necessary to complete all the fields” in the QSR, including customers’ demographic data, including race and ethnicity, in Schedule C. Credit unions do not have to require their members to self-identify their demographic data. However, if members refuse to do so, the QSR mandates credit unions to collect the information using methods permitted by the Home Mortgage Disclosure Act (HMDA) or the Community Development Financial Institution (CDFI) Fund. Information cannot be obtained through the use of proxies, as is currently done regarding applications to the CDFI Fund. This therefore appears to refer solely to the reporting of race or ethnicity information on the basis of visual observation or surname as permitted by HMDA. For reasons detailed in this letter, many of which have been recognized by other regulators, this requirement poses significant litigation, compliance, reputation, market, and operational risk to ECIP-awardee credit unions. The risk is such that more than one credit union has characterized the requirement as essentially impossible to meet and a poison pill for the program. In addition to the issues surrounding the demographic data collection, multiple ECIP-awardee credit unions have expressed that the requirement to report striated area median income (AMI) levels in Schedule C is also extremely difficult. Schedule C requires ECIP-awardee credit unions to report the number and amount of loans they originate for borrowers across three AMI tiers: 50% or below of AMI; 51-80% of AMI, or 81-100% of AMI. Credit union systems reportedly do not currently contain the functionality to automatically calculate and store individual borrower AMI percentages in the manner required by the QSR Schedule. While AMI measurements may be consulted in a mortgage context, they are not commonly considered in other types of lending and non-mortgage lending systems are not configured to pull, calculate, or store this information for reporting. This calculation would need to be done manually. One ECIP-awardee credit union suggested that perhaps Treasury could create an ease-of-use tool to assist with this. |
Treasury will collect data on Qualified Lending and Deep Impact Lending by race and ethnicity to enable effective and accurate assessment of the impact of the program, consistent with statutory requirements. Institutions that cannot meet the requirements for reporting may redeem the ECIP instruments consistent with the requirements in the ECIP legal agreements. Treasury guidance requires ECIP participants to collect on race and ethnicity data through voluntary borrower self-identification or other non-proxy methods. Borrowers do not have to provide race and ethnicity data and Participants are not non-compliant under such circumstances. Treasury allows the option to use specified non-proxy techniques such as visual observation but recipients are not required to do so. Treasury will provide additional guidance on this point. Treasury will consider the development of additional tools to facilitate calculation of borrower income in comparison to Area Median Income. |
| 49 | Risk | 5/8/2023 | Credit Union National Association | The Statutory Language Is Insufficient to Eliminate Fair Lending Risk Regarding the Collection of Demographic Data. As Treasury has cited, the Consolidated Appropriations Act of 2021 contains a statutory provision stating that ECIP-awardee credit unions may collect demographic data for the sole purpose of monitoring compliance with the program. The statute makes clear that an ECIP-awardee may collect information without violating section 701(a)(1) of the Equal Credit Opportunity Act (ECOA). It further specifies that neither the Consumer Financial Protection Bureau (CFPB) nor any Federal agency can take adverse action against an ECIP-awardee credit union related to that collection of demographic information. However, this statutory protection does not provide credit unions with sufficient infrastructure to undertake collection without exposing the credit union to unacceptable levels of risk. In its Quarterly Supplemental Report Frequently Asked Questions (QSR FAQs), Treasury indicates that ECIP-awardee credit unions are not required collect information on a “particular transaction that it reasonably believes would not fall within any of the categories of Qualified Lending.” This guidance opens the door to credit unions choosing not to inquire about the demographic data of a borrower based on assumptions made regarding a borrower’s race or ethnicity. For example, a loan officer could decline to collect information about the race of an applicant he or she presumes to be White. This could result in applicants of perceived color experiencing more friction in the lending process by completing additional steps to provide (or refuse to provide) invasive demographic information and White-presenting applicants of color being exposed to colorism-based discrimination. While the statute may protect ECIP-awardees who collect information against adverse action from the CFPB or other federal agencies, it is not clear that it would protect credit unions in connection with discrimination based on not collecting information. The statute also does not provide credit unions with protection against individual or class action lawsuits brought under ECOA’s private right of action. Further, it is not at all clear that the federal carve out would protect credit unions against state laws that are parallel to ECOA and that directly make reference to exceptions in ECOA. Credit unions attempting compliance with the requirement would likely expose themselves to significant litigation at the state and Federal level. Even if a credit union were to eventually succeed in winning that litigation on the basis of the statute, the potential reputational damage, financial cost, and loss of member resources is simply not an acceptable risk to most ECIP-awardee credit unions. |
Treasury will collect data on Qualified Lending and Deep Impact Lending by race and ethnicity to enable effective and accurate assessment of the impact of the program, consistent with statutory requirements. Institutions that cannot meet the requirements for reporting may redeem the ECIP instruments consistent with the requirements in the ECIP legal agreements. Treasury has and will continue to communicate with the federal banking regulators and NCUA regarding the ECOA exemption in the ECIP statute, but Treasury has no authority to promulgate guidance on ECOA. Treasury also has no ability to provide safe harbors under state law. |
| 50 | Risk | 5/8/2023 | Credit Union National Association | Treasury Must Work with the CFPB and NCUA to Establish a Framework Prior to Implementing a Requirement to Collect Demographic Data. While the statutory carve out cited by Treasury may provide some protection for credit unions that attempt to collect the information against regulatory action related to the act of collection itself, it does not address the compliant methods of collection, the appropriate language to use during collection. Nor does it address how information should be appropriately stored or shared throughout the lending process. Treasury indicates that credit unions seeking to design a compliant framework for collecting demographic data on other types of loans should simply cross-apply the existing framework for HMDA and the CDFI certification process. The collection of racial and ethnic information under HMDA is conducted under a complex regulatory framework found in the implementing regulations for ECOA and HMDA, Regulations B and C respectively. This framework includes model forms for the collection of information, clarity about what portions of those forms may be altered and how, instructions on the operational context in which the information can be requested, instructions as to how to present the questions to the applicant, mandatory signage regarding the availability of collected data, and an annually updated guide regarding implementation of this framework that runs more than 350 pages. This framework was specifically designed for mortgage lending, which is the most extensively regulatory type of consumer lending and typically represents the single largest personal financial transaction the vast majority of consumers engage in. It is not appropriate or reasonable to expect ECIP-awardee credit unions to be able to simply project mortgage lending forms, processes, procedures, trainings, and systems capabilities onto all types of loans. Further, not all ECIP-awardee credit unions may report under HMDA. According to the Federal Financial Institution Examination Council (FFIEC) Modified Loan/Application Register (LAR) data for the year 2022,22 only 31 of the 77 ECIP-awardee credit unions submitted a LAR file. This indicates that 59.74% of ECIP-awardee credit unions did not submit HMDA data in 2022. This could be for many reasons—these credit unions may do mortgage lending with a Credit Union Service Organization (CUSO) or other partner who handles the collection and submission of HMDA data. They could do their own mortgage lending but not in sufficient quantities to cross the reporting thresholds in the HMDA regulation. Or these credit unions may simply not do mortgage lending. Regardless of the reason, Treasury is now asking these ECIP-awardee credit unions to understand and implement a complex and demanding regulatory structure they have not previously been required to comply with. Further, mortgage lending is simply not analogous to other types of loans. Different types of loans have different inbound routes to a credit union, levels of interaction with applicants, and degrees of friction and disclosure. Indirect lending provides a clear example of where this approach falls short. Indirect lending relationships exist in different forms, but a common arrangement involves a credit union contracting with a merchant to originate loans at the point of sale, such as an auto dealer, using credit union underwriting criteria and subject to credit union oversight and quality control. Indirect auto lending is exceedingly common among credit unions and provides critical way to assist members in accessing affordable loans to ensure they have a car. Other indirect lending relationships allow a third-party vendor such as a CUSO or other outside party to perform activities related to indirect lending including underwriting, servicing, repossession, or insurance processing. When concerns regarding indirect lending have been raised to Treasury, credit unions were told to call Treasury directly to obtain information on a case-by-case basis. This is not sufficient. In an indirect lending context, dealers have the ability to decline to work with lenders. Where credit unions may be seen to be collecting information improperly or requiring dealers to implement processes that they are not comfortable with, they may simply be dropped as a lender. In order to establish compliant and functional frameworks for the collection of demographic data across in a variety of lending contexts, the involvement of the CFPB and NCUA is necessary and appropriate. Treasury has indicated it is in discussions with these regulators regarding what compliance might look like. However, establishing the requirement before this framework is in place is putting the cart before the horse. Treasury, NCUA, and CFPB must collaborate on an appropriate framework, and only once that is finalized and credit unions are able to assess a reasonable timeline for implementation of that framework and whether the forms that are subject to this notice and comment are reasonable. Treasury and the CFPB should jointly conduct a full rulemaking process that seeks to first understand various lending contexts, to identify the processes that best achieve understanding for consumers in providing the information, and to build practicable and operational frameworks based on that input that does not violate ECOA or Regulation B. ECIP-awardee credit unions need the publication of this guidance from the CFPB so that lending partners, like dealers, are able to establish their own requirements and manage their own levels of risk associated with doing business with ECIP-awardee credit unions. Further, this clarity from the CFPB would also provide a basis for reasonable examination procedures for the NCUA. The participation of the CFPB and NCUA is critical to providing certainty for auditors, insurers, Supervisory Committees, and others tasked with ensuring an individual credit union’s compliance with consumer protection requirements and safety and soundness. |
Treasury will collect data on Qualified Lending and Deep Impact Lending by race and ethnicity to enable effective and accurate assessment of the impact of the program, consistent with statutory requirements. Institutions that cannot meet the requirements for reporting may redeem the ECIP instruments consistent with the requirements in the ECIP legal agreements. Treasury has and will continue to communicate with the federal banking regulators and NCUA regarding the ECOA exemption in the ECIP statute, but Treasury has no authority to promulgate guidance on ECOA. |
| 51 | Data Collection - Race and Ethnicity Data | 5/8/2023 | Credit Union National Association | The Requirement to Collect Demographic Data on All Loans Will Harm Member Trust in ECIP-Awardee Credit Unions. When consumers shop for a mortgage loan, they experience the same forms and inquiries regarding their race and ethnicity information at every lender they speak with. Many credit unions report that consumers are sometimes put off by the request initially. Seeing formal regulatory language, posted HMDA signs, and having the same experience across all lenders leads consumers to understand and accept that these inquiries are Federal requirements and not driven by an intention to discriminate. The regulatory framework to obtain data through HMDA makes these requests ubiquitous and legitimizes them in the eyes of consumers. Treasury is requiring ECIP-awardee credit unions to proceed without those protections or any consumer-facing messaging. Treasury’s requirements would apply to only a small number of credit unions in markets spread across the country. Many credit unions will be the only lender in their market requesting this information on non-mortgage loans. According to Treasury’s most recent list of ECIP participants, eight of the 36 states and territories have only one ECIP participant. This means these participants will be the only organization in their entire state collecting this information on non-HMDA loans. When a borrower for a non-mortgage loan is asked about their race and ethnicity, it will be a relatively- unique experience within their community. Reports of this experience to other lenders or third- parties will likely result in mischaracterizing the request as discrimination based on race or ethnicity to consumers. This is simply an unacceptable outcome for credit unions. In preparation for rulemakings on HMDA following the passage of the Dodd-Frank Act, a series of public hearings were held to elicit feedback on improvements for Regulation C. In three of four of those hearings, panelists repeatedly emphasized the reluctance of applicants to provide demographic information and the challenges financial institutions face in collecting that information. In finalizing the 2015 HMDA rule, the CFPB specifically modified the introductory paragraph in the sample data collection form in Appendix B to improve the explanation to applications as to why their financial institution is collecting their demographic information. The Bureau cited comments in the rulemaking process that expressed that clear, plain language explanations are necessary are to make the applicant feel comfortable in responding. In finalizing the language, the CFPB stated “[t]he Bureau believes that the explanation provided to applicants by financial institutions should clearly state why their demographic information is being collected and for what purposes such information is requested by the Federal government.” The Bureau further required modified the title of the sample data collection form from “Information for Government Monitoring Purpose,” which it determined may discourage applicants from providing information to “Demographic Information of Applicant and Co- Applicant.” The Bureau also required that financial institutions inform applicants that “Federal law requires collection of their demographic information in order to protect consumers and to monitor compliance with Federal statutes that prohibit discrimination against applicants on the basis of ethnicity, race, and sex” to clarify for applicants that the information is being collected to protect them from discrimination, and not so that the financial institution can base its credit decision on the information. The Bureau made these changes because it recognized the truth from hearing panelists and commenters that applicants that when questions are asked regarding their demographic information in the context of a loan transaction, they become suspicious that the financial institution may be discriminating against them. Further, the Bureau took appropriate steps to address these concerns by safe harbor forms and language to assure the applicant that the information is being collected in compliance with Federal law, and not simply due to the lender’s desire to know. HMDA also requires posted signage. These regulatory compliance structures formalize the requirements and provide nervous applicants with a clear, believable explanation as to why this information is being requested. Further, if they make applications to other lenders, they will be asked the same questions and receive the same forms, reinforcing the idea that the information request is not malicious. Even so, some applicants do refuse to provide racial and ethnic data. HMDA requires loan officers to assess race and ethnicity demographic data through visual observation and surname, a practice widely loathed by credit union staff. In the context of HMDA reporting, one credit union reported that a loan officer guessed the applicant’s ethnicity and race based on visual observation incorrectly, causing the applicant distress.38 The applicant stated they did not provide the information purposefully as they come from a multiethnic family, and that they self-identify differently than was guessed. The applicant indicated they found the assumptions made by the loan officer to be racist and rude. The loan officer apologized, explained the requirement, and was put in the position of assuring the member of their lack of racist intent. Other credit unions shared similar stories and indicated the explanations regarding government requirements are not always accepted, and sometimes applicants abandon the application entirely as a feeling of mistrust and a suspicion of racism has been established. Some credit unions felt it exposed their institutions to litigation concerns and reputational risk. Even if the existence of the legal requirement might ultimately protect the credit union from loss in court, the loss of trust from their membership and potential harm to their reputation in their community due to accusation of discrimination is extremely concerning. The requirement may seem harmless to regulators in the mission to gathering important data, but the reality of putting it into practice is troubling for loan officers who find it upsetting and in contravention with a credit union’s mission and commitment to diversity, equity, and inclusion. One credit union described the requirement as “forcing a loan officer to put on a ‘racist hat’ for a minute,” in order to guess at the applicants race and ethnicity based on their visual appearance. Others described the requirement as “counter-intuitive” and “odd,” considering that the goals of Federal regulation should be to eliminate discrimination, rather than encouraging loan offices to become proficient in guessing the race of individuals based on their physical appearance or surname. While this requirement remains present in the implementing regulations of HMDA, it is notable in the Bureau’s recently finalized Small Business Lending rule (Final Small Business Rule), they have eliminated the requirements to collect ethnicity and race via visual observation or surname. In discussing this decision, the Bureau cited commenter assertions that the requirement to assess ethnicity and race via visual observation or surname “would impair customer relationships, citing small business lending as more relationship-dependent than other forms of credit.” The Bureau also cited a comment stating “that because banks are more likely to have ongoing interactions with a small business owner than someone seeking a mortgage, offense taken from visual observation or surname analysis would be more detrimental.” Regarding agricultural lenders, the Bureau stated the requirement “would be negatively received by applicants” who “might perceive the notice as an indication that the lender intends to or must contradict the applicant’s wishes.” In summarizing these concerns, the Bureau stated: [T]he Bureau is mindful, consistent with the comments it received, that much of the lending to small businesses in smaller communities and in underserved and rural areas occurs through relationship banking that involves more frequent and more personal contact with applicants. The Bureau is also mindful of concerns raised by lenders that rely on in-person engagement that their customer relationships may be negatively impacted by customer discomfort with a visual observation and surname data collection requirement, particularly during initial implementation of this final rule. The Bureau also acknowledges the concerns expressed by commenters that bank employees may feel uncomfortable making ethnicity and race determinations on the basis of visual observation or surname. Recognizing the very real stakes for small business lenders, particularly those in smaller communities and underserved and rural areas, the Bureau declined to finalize a requirement to obtain ethnic and racial data via visual observation and surname. Instead, the Bureau opted to require lenders to establish reasonable procedures to collect the information, to establish sample data collection forms with plain language explanations, and to launch its own public awareness campaign to educate small business owners in order to improve willingness to provide the information. The CFPB has ever desire to obtain complete and accurate demographic data regarding small business lending. However, based on its deep experience with HMDA, its extensive research prior to finalizing the rule, and evaluation of the public comments received during the rulemaking process, the Bureau also recognizes the potential significant damage to the consumer relationship that the rule could pose, particularly to underserved communities. Treasury owes the same level of consideration and research with regard to ECIP-awardee credit unions. This is especially given their relative isolation in their individual markets and the amplified importance of relationship banking for CDFIs seeking to serve the most vulnerable communities. Treasury would be risking this damage to consumer trust across all loan types and without providing the sample forms or plain language explanations that the CFPB has recognized as critical to building trust with consumers in obtaining this information. CUNA urges Treasury in the strongest possible terms to undertake a more robust, interagency planning and implementation process before requiring that credit unions collect, store, and report this information. |
Treasury will collect data on Qualified Lending and Deep Impact Lending by race and ethnicity to enable effective and accurate assessment of the impact of the program, consistent with statutory requirements. Institutions that cannot meet the requirements for reporting may redeem the ECIP instruments consistent with the requirements in the ECIP legal agreements. Treasury does not prevent Participants from using signage, information sheets, or other methods of informing borrowers of the purpose of collection of race and ethnicity data to comply with program reporting requirements. |
| 52 | Data Collection - Race and Ethnicity Data | 5/8/2023 | Credit Union National Association | The Requirement to Obtain Demographic Data May Have Significant Implications for the Cost of Credit For ECIP-Awardee Credit Union Members If a credit union were to ignore the litigation, compliance, and reputational risk associated with implementing these requirements, the operational costs associated with doing so could be enormous. Credit unions often use a different loan origination systems (LOSs) for consumer and open-ended loans compared to their mortgage lending. Collecting, storing, and reporting on this information for all loans would likely involve an overhaul of multiple systems, potentially at tremendous cost to credit unions. It is common for CFPB-implemented regulation to drive the market and the creation of new software platforms. In the Final Small Business Rule, the Bureau recognized that larger financial institutions are often at the tip of the compliance spear, being the first to work directly with vendors to implement and perform testing. Smaller financial institutions often benefit from larger financial institutions initiating this process and testing. However, the market for those solutions to meet compliance obligations is very large and the guidance provided by Bureau rules is very detailed. Given the small number of ECIP-awardees who would be obligated to comply with these requirements, the lack of guidance provided in how to implement the requirements, and the breadth of products that would need to be covered, it seems likely that the number of software solutions created to address Treasury’s requirements would be small and the cost of these solutions would be very expensive. Without an industry-wide effort for compliance, the 77 ECIP-awardee credit unions will be left to bear the entire cost of the designing and building of data collection and reporting systems that must integrate with third-party systems. And they must do it in an incredibly short time, which will only further inflate the cost. Further, because mortgage lending is the most extensively-regulated type of consumer lending and because of the significant training, structure, and protections in place, it is also the most expensive type of loan to obtain. Creating parallel frameworks for other types of loans will directly increase the cost associated with those loans. Further, these requirements may mean credit unions are less competitive in their market, as is likely to happen in the indirect auto lending context as described above. Credit union plans for ECIP awards did not include this type of significant outlay on compliance, systems, and implementation costs. If implemented, it is likely that it will significantly harm ECIP-awardee market presence and increase the cost for products and services to the communities the ECIP is intended to assist. |
Treasury will collect data on Qualified Lending and Deep Impact Lending by race and ethnicity to enable effective and accurate assessment of the impact of the program, consistent with statutory requirements. Institutions that cannot meet the requirements for reporting may redeem the ECIP instruments consistent with the requirements in the ECIP legal agreements. Treasury will not allow participating institutions to use proxy data for the purpose of identifying loans made to the People-based categories of Qualified Lending. Loans to Minority Communities are already counted under the Place-based categories of Qualified Lending. Treasury notes that the ECIP statute provides an exemption from ECOA for ECIP participants, which did not exist for the period of time that was used for the Initial Supplemental Report. As a result, use of proxy data was permitted for the Initial Supplemental Report. Treasury published the draft forms and instructions for the QSR in April 2022, before any institutions received their funds. The draft forms and instructions noted that proxies would not be permitted. |
| 53 | Data Collection - Race and Ethnicity Data | 5/8/2023 | Credit Union National Association | The Timeline for Implementation of Demographic Data Requirements Is Not Reasonable. Treasury has indicated that quarterly reporting for each quarter through June 30, 2024 will not be considered inaccurate or incomplete based on missing demographic data. Therefore, ECIP- awardee credit unions must establish and implement procedures for the collection of demographic data across all loan types no later than July 1, 2024. This collected demographic data for the second half of 2024 must be included in Schedule C for calendar year 2024, which will be due concurrently with the Call Report for the quarter ending March 31, 2025. This timeline permits ECIP-awardee credit unions 15 months to design compliance and legal processes for the collection of data with no regulatory or examiner guidance or safe harbor options, obtain changes to the operating systems from their vendors or design and build out their own systems, conduct due diligence of new systems and third-parties if necessary, design trainings for a extremely broad swatch of credit union staff to conduct highly sensitive conversations that could pose significant damage to the relationship with members, establish secure systems to store extremely sensitive data to maintain its integrity and confidentiality, and implement other risk-based procedures to minimize attendant risk, such as reasonably isolating this data from other credit union operations. For comparison, the 2015 changes to HMDA were published in the Federal Register on October 28, 2015. Financial institutions did not begin collection under the new rule until January 1, 2018, a full 26 months after the rule was finalized. In finalizing the Final Small Business Rule, the CFPB allowed for implementation periods that were tiered based on asset size, the absolutely shortest of which was 18 months, and the longest was 33 months. The Bureau discussed its reasons for the tiered implementation timeline: The Bureau gives credence to a set of three major factors commenters cited in requesting additional time, beyond 18 months, to comply with the rule (whether from 24 months to 3.5 years): the need to purchase or upgrade compliance software (including time to find and perform due diligence on vendors, purchase software, integrate compliance software with other systems, and test all of these); the need to create or adjust policies and procedures to comply with the rule; the need to train and, in some cases, hire staff to use the new software and implement the policies and procedures to collect data. It the Final Small Business Rule, the Bureau thoroughly discussed its recognition that smaller financial institutions face particular difficulties that justify providing them additional time to comply with the rule. The Bureau recognized that smaller financial institutions are “at the mercy of their software vendors and other third-party providers” whereas a large bank may simply develop in-house compliance software. It must be noted that the Bureau offered compliance periods of 24 months for HMDA and 33 months for the Final Small Business Rule when these requirements were being applied to only one line of lending. This means that credit unions were implementing changes to only one line of systems, procedures, forms, and conducting training only for those staff that work on those loans. Treasury is proposing that procedures be implemented across all types of lending – an exponentially larger task. In addition to system requirements, credit unions would also need to conduct highly-sensitive and intensive training on how to safely obtain this information for an extremely broad class of employees. They also would need to implement new forms, processes, and procedures across all loan product lines, including those that involve third parties. Additionally, as the credit union would now be storing significant quantities of highly sensitive information, they would likely also need to implement additional protection for the safety and confidentiality of this information, requiring significant changes to their privacy and information security policies. Credit unions would have to design all these structures themselves or conduct vendor due diligence on third- party solutions and obtain legal opinions regarding their compliance as there is no guidance from the CFPB or NCUA regarding what is sufficient. Credit unions estimate that these changes could take between five and ten years, depending on individual credit union’s size, sophistication, and the loan products offered. |
Treasury will collect data on Qualified Lending and Deep Impact Lending by race and ethnicity to enable effective and accurate assessment of the impact of the program, consistent with statutory requirements. Institutions that cannot meet the requirements for reporting may redeem the ECIP instruments consistent with the requirements in the ECIP legal agreements. Since ECIP recipients will only be required to submit QSRs for the first ten years after receiving investments, providing a longer grace period for recipients to develop data collection systems is not feasible. |
| 54 | Data Collection - Race and Ethnicity Data | 5/8/2023 | Credit Union National Association | Treasury Should Make the Collection of Data on Non-HMDA Loans Voluntary. For all the reasons previously stated, Treasury should also make the requirement to collect actual demographic data on non-HMDA loans and report that data in Schedule C voluntary. If Treasury wants demographic data on loans of all types, it should accept proxy data in lieu of actual data. Neither the Initial Supplemental Report nor the Securities Purchase Agreement indicated the ECIP-awardees may be required to implement processes to collect actual demographic data on all loans without the use of proxies. The use of proxies was clearly contemplated in the Initial Supplemental Report and credit unions had absolutely no indication this would be required. This requirement is incredibly burdensome, and implementation is excessively risky. The statutory language regarding ECOA states “any low- and moderate-income community financial institution may collect data…” (Emphasis added.) This fact and the Congressional intention was already detailed by the Community Development Bankers Association, Inclusiv, and Sones & White in 2022 comment letters to Treasury in response to the prior proposal. The statutory language clearly indicates a Congressional expectation that the collection of demographic data will be optional and protected—not mandatory. Indeed, no comments to the 2022 proposal argued that the requirement should be read otherwise or mandated as a requirement. Further, because the statutory language is clearly permissive, no ECIP-applicant could have known they would be required to implement such a requirement. Obligating credit unions to accept this level of risk and obligation without notice, when they have already taken the money and would endanger their CDFI designation by failing to comply, is not reasonable. Multiple credit unions report they would have declined to apply for or accept the funds if this requirement had been disclosed in the application process. This fails as a measure of basic fairness in dealing with ECIP- awardees. If Treasury wishes to pursue the goal of obtaining actual demographic data on all loans, it should work with the CFPB and NCUA to provide reasonable compliance guidance and examination expectations for ECIP-awardee credit unions so that credit unions can illustrate to their examiners, auditors, and membership that they are meeting their compliance obligations and not unduly exposing the credit union to litigation and reputational risk. Further, Treasury and the CFPB should jointly undertake a consumer-facing messaging campaign to make consumers aware that this information may be requested for their benefit and protection, in order to provide reasonable assurances to consumers that ECIP-awardee credit unions are not discriminating against them in complying with the requirement. |
Treasury will collect data on Qualified Lending and Deep Impact Lending by race and ethnicity to enable effective and accurate assessment of the impact of the program, consistent with statutory requirements. Institutions that cannot meet the requirements for reporting may redeem the ECIP instruments consistent with the requirements in the ECIP legal agreements. Treasury will not allow participating institutions to use proxy data for the purpose of identifying loans made to the People-based categories of Qualified Lending. Loans to Minority Communities are already counted under the Place-based categories of Qualified Lending. Treasury notes that the ECIP statute provides an exemption from ECOA for ECIP participants, which did not exist for the period of time that was used for the Initial Supplemental Report. As a result, use of proxy data was permitted for the Initial Supplemental Report. Treasury published the draft forms and instructions for the QSR in April 2022, before any institutions received their funds. The draft forms and instructions noted that proxies would not be permitted. |
| 55 | Data Collection - Race and Ethnicity Data | 5/8/2023 | Kentucky Credit Union League | Treasury severely underestimates the significance of its requirement to obtain actual demographic data on all loans and is ignoring the compliance, operational, litigation, and reputational risk associated with the requirement. The QSR instructions state that credit unions will be required to have “processes in place to attempt to collect the data necessary to complete all the fields” in the QSR, including customer’s demographic data. While credit unions do not have to require their members to self-identify their demographic data, if they refuse to do so, credit unions must collect the information using methods other than statistical proxies, regardless of whether these are currently required by the Home Mortgage Disclosure Act (HMDA) or the Community Development Financial Institution (CDFI) Fund. When credit unions have raised deeps concerns regarding the fair lending risk associated with collecting, storing, and reporting this actual demographic data, Treasury has pointed to the statutory provision that clarifies that collecting this information is not a violation of section 701(a)(1) of the Equal Credit Opportunity Act (ECOA). This carve out clarifies that collection is not a violation of ECOA and specifies that neither the Consumer Financial Protection Bureau (CFPB) nor any Federal agency can take adverse action related to that collection. This in and of itself does not provide credit unions with sufficient infrastructure to undertake collection without exposing the credit union to unacceptable levels of risk. |
Treasury will collect data on Qualified Lending and Deep Impact Lending by race and ethnicity to enable effective and accurate assessment of the impact of the program, consistent with statutory requirements. Institutions that cannot meet the requirements for reporting may redeem the ECIP instruments consistent with the requirements in the ECIP legal agreements. |
| 56 | Risk | 5/8/2023 | Kentucky Credit Union League | The statutory carve-out does not protect credit unions from private rights of action related to the information collection, nor does it address state law prohibitions on discrimination. These items ignore that the trust between the credit union and the membership could be severely strained when this type of demographic information is being solicited from a member. The underserved Hispanic community already has reservations about financial institutions and the requesting this type of data will only exacerbate the problem. The public perceptions of what has occurred especially after a loan is declined, even after relaxed underwriting standards are applied, could be extremely unfavorable to PrimeWay. Further, it is not at all clear that the federal carve out would protect credit unions against state laws that are parallel to ECOA and that directly make reference to exceptions in ECOA. Credit unions that attempted compliance with the requirement would likely be exposing themselves to significant litigation at the state and Federal level. Even if a credit union were to eventually succeed in winning that litigation, the risk of reputational damage, financial cost, and loss of member resources is simply not an acceptable risk. |
Treasury will collect data on Qualified Lending and Deep Impact Lending by race and ethnicity to enable effective and accurate assessment of the impact of the program, consistent with statutory requirements. Institutions that cannot meet the requirements for reporting may redeem the ECIP instruments consistent with the requirements in the ECIP legal agreements. |
| 57 | Risk | 5/8/2023 | Kentucky Credit Union League | Treasury has not provided the necessary regulatory infrastructure to permit ECIP- awardees to collect demographic data on loans not covered by HMDA. Furthermore, to require ECIP-awardees to collect these data would subject them to unfair competitive disadvantages in a marketplace where speed and convenience of processes is a major differentiator. Lenders are accustomed to the data gathering and reporting requirements for HMDA and the normal CDFI reporting requirements. Mortgage lending is the most extensively- regulated type of consumer lending and because of the significant training, structure, and protections in place, it is also the most expensive type of loan to obtain. While the statutory carve out cited by Treasury may provide some protection for credit unions that attempt to collect the information against regulatory action related to the act of collection itself, it does not address the compliant methods of collection, the appropriate language to use during collection, or how information should be appropriately stored or shared throughout the lending process. It is simply not reasonable for Treasury to assume that credit unions can simply “cross- apply” mortgage training, forms, and procedures to other types of loans. For example, Treasury has not provided any guidance in how credit unions should design compliant procedures related to processes like indirect auto lending. Indirect auto lending is exceedingly common among credit unions and a critical way to assist members in accessing affordable loans to ensure they have a car to get to work. When this was raised to Treasury, credit unions were told to call Treasury directly to obtain information on a case-by-case basis. This is not sufficient. In an indirect lending context, dealers have the ability to decline to work with lenders. Where credit unions may be seen to be collecting information improperly or requiring dealers to implement processes that they are not comfortable with, they may simply be dropped. In order to reasonably implement this requirement, credit unions would need guidance from the CFPB to be established and broadly published so that lending partners, like dealers, are able to establish their own requirements and manage their own levels of risk associated with doing business with ECIP-awardee credit unions. It is simply not reasonable for Treasury to assume that credit unions can simply “cross-apply” mortgage training, forms, and procedures to other types of loans. For example, Treasury has not provided any guidance in how credit unions should design compliant procedures related to processes like indirect auto lending. Indirect auto lending is exceedingly common among credit unions and a critical way to assist members in accessing affordable loans to ensure they have a car to get to work. When this was raised to Treasury, credit unions were told to call Treasury directly to obtain information on a case-by-case basis. This is not sufficient. In an indirect lending context, dealers have the ability to decline to work with lenders. |
Treasury will collect data on Qualified Lending and Deep Impact Lending by race and ethnicity to enable effective and accurate assessment of the impact of the program, consistent with statutory requirements. Institutions that cannot meet the requirements for reporting may redeem the ECIP instruments consistent with the requirements in the ECIP legal agreements. Treasury does not prevent Participants from using signage, information sheets, or other methods of informing borrowers of the purpose of collection of race and ethnicity data to comply with program reporting requirements. |
| 58 | Burden | 5/8/2023 | Kentucky Credit Union League | Treasury severely underestimates the time, cost, and burden associated with implementing these requirements. If a credit union were to ignore the litigation, compliance, and reputational risk associated with implementing these requirements, the operational burden associated with doing so would be enormous. Credit unions often use a different loan origination system (LOS) for consumer and open- ended loans compared to their mortgage lending. Collecting, storing, and reporting on this information for all loans would likely involve an overhaul of these systems, potentially at tremendous cost to credit unions. It is common for CFPB-implemented regulation to drive the market and the creation of new software platforms. However, the market for those solutions to meet compliance obligations is very large and the guidance provided by Bureau rules is very detailed. Given the small number of ECIP-awardees who would be obligated to comply with these requirements, the lack of guidance provided in how to implement the requirements, and the breadth of products that would need to be covered, it seems likely that the number of software solutions created to address Treasury’s requirements would be small and the cost of these solutions would be very expensive. In addition to system requirements, credit unions would also need to conduct highly- sensitive and intensive training on how to safely obtain this information for an extremely broad class of employees. Credit unions would need to implement new forms, processes, and procedures across all loan product lines, including those that involve third parties. Additionally, as the credit union would now be storing significant quantities of highly sensitive information, they would likely also need to implement additional protection for the safety and confidentiality of this information, requiring significant changes to their privacy and information security policies. Credit unions would have to design all these structures themselves and obtain legal opinions regarding their compliance as there is no guidance from the CFPB or NCUA regarding what is sufficient. Credit unions estimate that these changes could take between 5 and 10 years, depending on individual credit union’s size, sophistication, and the loan products offered. |
While the commenter indicated that Treasury underestimated the burden associated with reporting, it did not provide information to allow for the burden estimates to be considered for revision. Treasury will collect data on Qualified Lending and Deep Impact Lending by race and ethnicity to enable effective and accurate assessment of the impact of the program, consistent with statutory requirements. Institutions that cannot meet the requirements for reporting may redeem the ECIP instruments consistent with the requirements in the ECIP legal agreements. |
| 59 | Risk | 5/8/2023 | Kentucky Credit Union League | Implementation of Treasury’s requirement would harm and confuse consumers and poses risk to credit unions’ reputations. Because mortgage lending is the most extensively-regulated type of consumer lending and because of the significant training, structure, and protections in place, it is also the most expensive type of loan to obtain. Creating parallel frameworks for other types of loans will directly increase the cost associated with those loans. Further, these requirements may mean credit unions are less competitive in their market, as is likely to happen in the indirect auto lending context as described above. Treasury’s requirements would apply to only a small number of individual credit unions, many of which may be the only lender in their market requesting this information on non- mortgage loans. If a consumer asks another lender why the credit union requested this information, it is likely the consumer will be told that they were being discriminated against based on their race or ethnicity. This is simply an unacceptable outcome for credit unions. The regulatory framework for obtaining data under HMDA makes these requests ubiquitous and legitimizes them in the request of consumers. Treasury is requiring ECIP-awardee credit unions to proceed without those protections or any consumer- facing messaging. |
Treasury will collect data on Qualified Lending and Deep Impact Lending by race and ethnicity to enable effective and accurate assessment of the impact of the program, consistent with statutory requirements. Institutions that cannot meet the requirements for reporting may redeem the ECIP instruments consistent with the requirements in the ECIP legal agreements. Treasury does not prevent Participants from using signage, information sheets, or other methods of informing borrowers of the purpose of collection of race and ethnicity data to comply with program reporting requirements. |
| 60 | Risk | 5/8/2023 | Kentucky Credit Union League | Basic fairness requires that Treasury should have been clear about this requirement prior to allowing credit unions to execute agreements and accept ECIP award funds. Neither the Initial Supplemental Report nor the Securities Purchase Agreement indicated the ECIP awardees may be required to implement processes to collect actual demographic data on all loans without the use of proxies. The use of proxies was clearly contemplated in the Initial Supplemental Report and credit unions have absolutely no indication this would be required. This requirement is incredibly burdensome, and implementation is excessively risky. Many credit unions would have declined to apply for or accept the funds if this requirement had been disclosed prior to the publication of the proposed QSR. Obligating credit unions to accept this level of risk without notice once they have already taken the money and endangering their CDFI designation if they fail to comply is not reasonable. This fails as a measure of basic fairness in dealing with ECIP awardees. |
Treasury will collect data on Qualified Lending and Deep Impact Lending by race and ethnicity to enable statutory-driven program reporting requirements. Institutions that cannot meet the requirements for reporting may redeem the ECIP instruments consistent with the requirements in the ECIP legal agreements. Participation in the ECIP is not a condition of CDFI Certification. Treasury published the draft forms and instructions for the QSR in April 2022, before any institutions received their funds. The draft forms and instructions noted that proxies would not be permitted. |
| 61 | Proxy data | 5/8/2023 | Kentucky Credit Union League | Treasury should make the requirement to collect demographic data on non-HMDA loans voluntary. For all the reasons previously stated, Treasury should make the requirement to collect actual demographic data on non-HMDA loans and report that data in Schedule C voluntary. If Treasury wants demographic data on loans of all types, it should accept proxy data in lieu of actual data. If Treasury wishes to pursue the goal of obtaining actual demographic data on all loans, it should work with the CFPB and NCUA to provide reasonable compliance guidance and examination expectations for ECIP-awardee credit unions so that credit unions can illustrate to their examiners, auditors, and membership that they are meeting their compliance obligations and not unduly exposing the credit union to litigation and reputational risk. Further, Treasury and the CFPB should jointly undertake a consumer-facing messaging campaign to make consumers aware that this information may be requested for their benefit and protection in order to provide reasonable assurances to consumers that ECIP awardee credit unions are not discriminating against them in complying with the requirement. Finally, once these basic foundations have been laid, Treasury should permit a reasonable implementation period after the publication of sufficient guidance to allow for the establishment of third-party solutions, vendor due diligence, and implementation and training. The minimum implementation period should be three years. |
Treasury will collect data on Qualified Lending and Deep Impact Lending by race and ethnicity to enable statutory-driven program reporting requirements. Institutions that cannot meet the requirements for reporting may redeem the ECIP instruments consistent with the requirements in the ECIP legal agreements. Treasury will not allow participating institutions to use proxy data for the purpose of identifying loans made to the People-based categories of Qualified Lending. Loans to Minority Communities are already counted under the Place-based categories of Qualified Lending. Treasury notes that the ECIP statute provides an exemption from ECOA for ECIP participants, which did not exist for the period of time that was used for the Initial Supplemental Report. As a result, use of proxy data was permitted for the Initial Supplemental Report. Treasury does not prevent Participants from using signage, information sheets, or other methods of informing borrowers of the purpose of collection of race and ethnicity data to comply with program reporting requirements. Treasury has and will continue to communicate with the federal banking regulators and NCUA regarding the ECOA exemption in the ECIP statute, but Treasury has no authority to promulgate guidance on ECOA. Since ECIP recipients will only be required to submit QSRs for the first ten years after receiving investments, providing a longer grace period for recipients to develop data collection systems is not feasible. |
| 62 | Risk | 5/8/2023 | Tennessee Credit Union League | Treasury severely underestimates the significance of its requirement to obtain actual demographic data on all loans and is ignoring the compliance, operational, litigation, and reputational risk associated with the requirement. The QSR instructions state that credit unions will be required to have “processes in place to attempt to collect the data necessary to complete all the fields” in the QSR, including customer’s demographic data. While credit unions do not have to require their members to self-identify their demographic data, if they refuse to do so, credit unions must collect the information using methods other than statistical proxies, regardless of whether these are currently required by the Home Mortgage Disclosure Act (HMDA) or the Community Development Financial Institution (CDFI) Fund. When credit unions have raised deeps concerns regarding the fair lending risk associated with collecting, storing, and reporting this actual demographic data, Treasury has pointed to the statutory provision that clarifies that collecting this information is not a violation of section 701(a)(1) of the Equal Credit Opportunity Act (ECOA). This carve out clarifies that collection is not a violation of ECOA and specifies that neither the Consumer Financial Protection Bureau (CFPB) nor any Federal agency can take adverse action related to that collection. This in and of itself does not provide credit unions with sufficient infrastructure to undertake collection without exposing the credit union to unacceptable levels of risk. |
Treasury will collect data on Qualified Lending and Deep Impact Lending by race and ethnicity to enable effective and accurate assessment of the impact of the program, consistent with statutory requirements. Institutions that cannot meet the requirements for reporting may redeem the ECIP instruments consistent with the requirements in the ECIP legal agreements. Treasury guidance requires ECIP participants to collect on race and ethnicity data through voluntary borrower self-identification or other non-proxy methods. Borrowers do not have to provide race and ethnicity data and Participants are not non-compliant under such circumstances. |
| 63 | Risk | 5/8/2023 | Tennessee Credit Union League | The statutory carve-out does not protect credit unions from private rights of action related to the information collection, nor does it address state law prohibitions on discrimination. The statutory carve out cited by Treasury specifically protects credit unions from adverse action related to the collection by the CFPB or the National Credit Union Administration (NCUA) which oversees credit union consumer compliance as part of its oversight examinations. However, the statute does not provide credit unions with protection against individual or class action lawsuits brought under ECOA’s private right of action. Credit unions that attempted compliance with the requirement would likely be exposing themselves to significant litigation at the state and Federal level. Even if a credit union were to eventually succeed in winning that litigation, the risk of reputational damage, financial cost, and loss of member resources is simply not an acceptable risk. |
Treasury will collect data on Qualified Lending and Deep Impact Lending by race and ethnicity to enable effective and accurate assessment of the impact of the program, consistent with statutory requirements. Institutions that cannot meet the requirements for reporting may redeem the ECIP instruments consistent with the requirements in the ECIP legal agreements. Treasury has and will continue to communicate with the federal banking regulators and NCUA regarding the ECOA exemption in the ECIP statute, but Treasury has no authority to promulgate guidance on ECOA. Treasury also has no ability to provide safe harbors under state law. |
| 64 | Risk | 5/8/2023 | Tennessee Credit Union League | Treasury has not provided the necessary regulatory infrastructure to permit ECIP-awardees to collect demographic data on loans not covered by HMDA. Lenders are accustomed to the data gathering and reporting requirements for HMDA and the normal CDFI reporting requirements. Mortgage lending is the most extensively-regulated type of consumer lending and because of the significant training, structure, and protections in place, it is also the most expensive type of loan to obtain. While the statutory carve out cited by Treasury may provide some protection for credit unions that attempt to collect the information against regulatory action related to the act of collection itself, it does not address the compliant methods of collection, the appropriate language to use during collection, or how information should be appropriately stored or shared throughout the lending process. It is simply not reasonable for Treasury to assume that credit unions can simply “cross-apply” mortgage training, forms, and procedures to other types of loans. For example, Treasury has not provided any guidance in how credit unions should design compliant procedures related to processes like indirect auto lending. Indirect auto lending is exceedingly common among credit unions and a critical way to assist members in accessing affordable loans to ensure they have a car to get to work. When this was raised to Treasury, credit unions were told to call Treasury directly to obtain information on a case-by-case basis. This is not sufficient. In an indirect lending context, dealers have the ability to decline to work with lenders. Where credit unions may be seen to be collecting information improperly or requiring dealers to implement processes that they are not comfortable with, they may simply be dropped. In order to reasonably implement this requirement, credit unions would need guidance from the CFPB to be established and broadly published so that lending partners, like dealers, are able to establish their own requirements and manage their own levels of risk associated with doing business with ECIP-awardee credit unions. |
Treasury will collect data on Qualified Lending and Deep Impact Lending by race and ethnicity to enable effective and accurate assessment of the impact of the program, consistent with statutory requirements. Institutions that cannot meet the requirements for reporting may redeem the ECIP instruments consistent with the requirements in the ECIP legal agreements. Treasury does not prevent Participants from using signage, information sheets, or other methods of informing borrowers of the purpose of collection of race and ethnicity data to comply with program reporting requirements. |
| 65 | Burden | 5/8/2023 | Tennessee Credit Union League | Treasury severely underestimates the time, cost, and burden associated with implementing these requirements. If a credit union were to ignore the litigation, compliance, and reputational risk associated with implementing these requirements, the operational burden associated with doing so would be enormous. Credit unions often use a different loan origination system (LOS) for consumer and open- ended loans compared to their mortgage lending. Collecting, storing, and reporting on this information for all loans would likely involve an overhaul of these systems, potentially at tremendous cost to credit unions. It is common for CFPB-implemented regulation to drive the market and the creation of new software platforms. However, the market for those solutions to meet compliance obligations is very large and the guidance provided by Bureau rules is very detailed. Given the small number of ECIP-awardees who would be obligated to comply with these requirements, the lack of guidance provided in how to implement the requirements, and the breadth of products that would need to be covered, it seems likely that the number of software solutions created to address Treasury’s requirements would be small and the cost of these solutions would be very expensive. In addition to system requirements, credit unions would also need to conduct highly- sensitive and intensive training on how to safely obtain this information for an extremely broad class of employees. Credit unions would need to implement new forms, processes, and procedures across all loan product lines, including those that involve third parties. Additionally, as the credit union would now be storing significant quantities of highly sensitive information, they would likely also need to implement additional protection for the safety and confidentiality of this information, requiring significant changes to their privacy and information security policies. Credit unions would have to design all these structures themselves and obtain legal opinions regarding their compliance as there is no guidance from the CFPB or NCUA regarding what is sufficient. Credit unions estimate that these changes could take between 5 and 10 years, depending on individual credit union’s size, sophistication, and the loan products offered. |
While the commenter indicated that Treasury underestimated the burden associated with reporting, it did not provide information to allow for the burden estimates to be considered for revision. Treasury will collect data on Qualified Lending and Deep Impact Lending by race and ethnicity to enable effective and accurate assessment of the impact of the program, consistent with statutory requirements. Institutions that cannot meet the requirements for reporting may redeem the ECIP instruments consistent with the requirements in the ECIP legal agreements. |
| 66 | Risk | 5/8/2023 | Tennessee Credit Union League | Implementation of Treasury’s requirement would harm and confuse consumers and poses risk to credit unions’ reputations. Because mortgage lending is the most extensively-regulated type of consumer lending and because of the significant training, structure, and protections in place, it is also the most expensive type of loan to obtain. Creating parallel frameworks for other types of loans will directly increase the cost associated with those loans. Further, these requirements may mean credit unions are less competitive in their market, as is likely to happen in the indirect auto lending context as described above. Treasury’s requirements would apply to only a small number of individual credit unions, many of which may be the only lender in their market requesting this information on non- mortgage loans. If a consumer asks another lender why the credit union requested this information, it is likely the consumer will be told that they were being discriminated against based on their race or ethnicity. This is simply an unacceptable outcome for credit unions. The regulatory framework for obtaining data under HMDA makes these requests ubiquitous and legitimizes them in the request of consumers. Treasury is requiring ECIP-awardee credit unions to proceed without those protections or any consumer- facing messaging. |
Treasury will collect data on Qualified Lending and Deep Impact Lending by race and ethnicity to enable effective and accurate assessment of the impact of the program, consistent with statutory requirements. Institutions that cannot meet the requirements for reporting may redeem the ECIP instruments consistent with the requirements in the ECIP legal agreements. Treasury does not prevent Participants from using signage, information sheets, or other methods of informing borrowers of the purpose of collection of race and ethnicity data to comply with program reporting requirements. |
| 67 | Risk | 5/8/2023 | Tennessee Credit Union League | Basic fairness requires that Treasury should have been clear about this requirement prior to allowing credit unions to execute agreements and accept ECIP award funds. Neither the Initial Supplemental Report nor the Securities Purchase Agreement indicated the ECIP awardees may be required to implement processes to collect actual demographic data on all loans without the use of proxies. The use of proxies was clearly contemplated in the Initial Supplemental Report and credit unions have absolutely no indication this would be required. This requirement is incredibly burdensome, and implementation is excessively risky. Many credit unions would have declined to apply for or accept the funds if this requirement had been disclosed prior to the publication of the proposed QSR. Obligating credit unions to accept this level of risk without notice once they have already taken the money and endangering their CDFI designation if they fail to comply is not reasonable. This fails as a measure of basic fairness in dealing with ECIP awardees. |
Treasury will collect data on Qualified Lending and Deep Impact Lending by race and ethnicity to enable statutory-driven program reporting requirements. Institutions that cannot meet the requirements for reporting may redeem the ECIP instruments consistent with the requirements in the ECIP legal agreements. Participation in the ECIP is not a condition of CDFI Certification. Treasury published the draft forms and instructions for the QSR in April 2022, before any institutions received their funds. The draft forms and instructions noted that proxies would not be permitted. |
| 68 | Proxy data | 5/8/2023 | Tennessee Credit Union League | Treasury should make the requirement to collect demographic data on non-HMDA loans voluntary. For all the reasons previously stated, Treasury should make the requirement to collect actual demographic data on non-HMDA loans and report that data in Schedule C voluntary. If Treasury wants demographic data on loans of all types, it should accept proxy data in lieu of actual data. If Treasury wishes to pursue the goal of obtaining actual demographic data on all loans, it should work with the CFPB and NCUA to provide reasonable compliance guidance and examination expectations for ECIP-awardee credit unions so that credit unions can illustrate to their examiners, auditors, and membership that they are meeting their compliance obligations and not unduly exposing the credit union to litigation and reputational risk. Further, Treasury and the CFPB should jointly undertake a consumer-facing messaging campaign to make consumers aware that this information may be requested for their benefit and protection in order to provide reasonable assurances to consumers that ECIP awardee credit unions are not discriminating against them in complying with the requirement. Finally, once these basic foundations have been laid, Treasury should permit a reasonable implementation period after the publication of sufficient guidance to allow for the establishment of third-party solutions, vendor due diligence, and implementation and training. The minimum implementation period should be three years. |
Treasury will collect data on Qualified Lending and Deep Impact Lending by race and ethnicity to enable statutory-driven program reporting requirements. Institutions that cannot meet the requirements for reporting may redeem the ECIP instruments consistent with the requirements in the ECIP legal agreements. Treasury will not allow participating institutions to use proxy data for the purpose of identifying loans made to the People-based categories of Qualified Lending. Loans to Minority Communities are already counted under the Place-based categories of Qualified Lending. Treasury notes that the ECIP statute provides an exemption from ECOA for ECIP participants, which did not exist for the period of time that was used for the Initial Supplemental Report. As a result, use of proxy data was permitted for the Initial Supplemental Report. Treasury does not prevent Participants from using signage, information sheets, or other methods of informing borrowers of the purpose of collection of race and ethnicity data to comply with program reporting requirements. Treasury has and will continue to communicate with the federal banking regulators and NCUA regarding the ECOA exemption in the ECIP statute, but Treasury has no authority to promulgate guidance on ECOA. Since ECIP recipients will only be required to submit QSRs for the first ten years after receiving investments, providing a longer grace period for recipients to develop data collection systems is not feasible. |
| 69 | Instructions | 4/26/2023 | Sones & White Consultants | A.General Clarifications 1)We noticed in the updated QSR Instructions that there will be a list of the various Schedules in ID.me, and the ECIP Participant is supposed to only check the boxes for the Schedules it is uploading. Does this mean it is acceptable to uncheck boxes within a Schedule when that schedule is due if the ECIP Participant has nothing to report in that schedule? For example, if an ECIP Participant does no lending in U.S. Territories or Puerto Rico, would it submit a Schedule D7 that is full of zeros on June 30, 2023 or just uncheck the Schedule D7 box in ID.me? |
Treasury will provide technical instructions regarding the submission of each schedule. |
| 70 | Instructions | 4/26/2023 | Sones & White Consultants | 2) We greatly appreciate the additional time allowed to include an acquired institution’s lending into the QSR of the surviving institution. We have one further clarification to request about institutions that acquire ECIP Recipients: Is the surviving institution required to submit a QSR solely for the acquired institution between the date the acquired institution ceases to exist (the Merger Closing Date) and the date the acquired institution’s lending must be incorporated into the surviving institution’s QSR? | Treasury will provide techical assistance regarding submission of QSRs when both the acquired institution and surviving institution are participants in the ECIP. |
| 71 | Other | 4/26/2023 | Sones & White Consultants | B.Clarification about Participations Regarding participations, we think we understand that participations purchased from an entity that was not an ECIP Participant should not be included in the Supplemental Reports, but a reporting entity should report loans that it originated even if it sold a participation in those loans to a non-ECIP Participant on the day of origination. The reportable amount of these loans would be the portion that the reporting entity retained on its books past the day of origination. Can you confirm that this is correct? |
This is correct |
| 72 | Instructions | 4/26/2023 | Sones & White Consultants | 1) If an ECIP Participant uses HMDA methodology to track minority status for mortgages, is it acceptable for it to apply that same methodology to non-mortgage loans? | This is addressed in FAQ 3.2 |
| 73 | Instructions | 4/26/2023 | Sones & White Consultants | 2) May non-HMDA reporters use HMDA methodologies to track minority status, or is this only permissible for HMDA reporters? | This is addressed in FAQ 3.2 |
| 74 | Instructions | 4/26/2023 | Sones & White Consultants | 3) May Participants submit other methodologies to Treasury for verifying Minority status? | Treasury will provide technical assistance if requested. |
| 75 | Data Collection - Race and Ethnicity Data | 4/26/2023 | Sones & White Consultants | 4)We appreciate the express provision in the QSR Instructions that ECIP Participants are not required to force their customers to self-report demographic information, but we request a slight change in terminology to account for customers that choose not to report their race and cannot otherwise be determined to be Minorities under an approved methodology. We request that these customers be termed “Not Known to Be Minorities” rather than “Not Minorities.” |
Loans where the borrower has not reported their demographic data and the demographic data cannot be identified through the other approved methods are not Qualified Lending under the People-based categories. Since the schedules only capture Qualified Lending, Treasury determined that it would be confusing to add columns to collect data on loans that are not Qualified Lending. Instead, Treasury has asked for estimates of loans for which the borrower has not reported demographic data in the narrative. |
| 76 | Instructions | 4/26/2023 | Sones & White Consultants | D.Clarifications about Tracking Demographic Information – Income We appreciate the clarification that the combined income of the applicant, joint applicants, and cosigners should be compared to the applicable AMI to determine LI or LMI status. We have just a few further clarifications to request: 1)Is it acceptable for an ECIP Participant to calculate LI or LMI status using whatever income for the applicant, joint applicants, and cosigners it has collected in the normal course of making the loan, or is it necessary to collect additional sources of income for these people? 2)If income is not collected in the normal course of making a loan (e.g., if the loan is secured by a CD or a Savings account), is an ECIP Participant required to collect income solely to determine a borrower’s LI or LMI status for QSR reporting purposes? 3)Similarly, if business owner income is not collected in the normal course of making a loan to a business, is an ECIP Participant required to collect income solely for the purpose of determining whether the business is owned by an LI individual for QSR reporting purposes? |
Treasury will clarify in guidance that Participants are not required to collect income data for borrowers if they are not doing so in the normal course of business. |
| 77 | Other | 4/26/2023 | Sones & White Consultants | E.Clarifications about Small Businesses and Farms and Underserved Small Businesses 1)When evaluating the Gross Annual Revenue (GAR) of a loan applicant’s parent company, should an ECIP Participant consider the consolidated GAR of the parent company and its subsidiaries? In other words, if a loan applicant business has a GAR of $700K and the parent company by itself has a GAR of $900K, would this count as a loan to a Small Business or Farm? 2)Are farms excluded from the definition of Underserved Small Businesses? |
Treasury will revise the instructions to address these comments. |
| 78 | Instructions | 4/26/2023 | Sones & White Consultants | F.Clarifications about Mortgages What definition should be used for Mortgage Lending? The CDFI Fund has defined Mortgages as “First Residential Mortgages,” but further explanation is needed even if that definition is to be used. For example, is it any residential mortgage where the ECIP Participant has the first lien position? Should primary residence, second residence, vacation home, rental or investment residences etc., all be included in the definition of Mortgage Lending for purposes of the “Mortgage Lending to Other Targeted Populations” category? |
Treasury will revise the instructions to clarify the definition that should be used for Mortgage lending. |
| Third Party Credit Risk | Additional Data Points | 2 | |||||||||
| Exclusion of Refinanced Loans | Alignment with Section 1071 | 1 | |||||||||
| Line of Credit Extensions and Renewals | Baseline Adjustments | 5 | |||||||||
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| Small Business Gross Annual Revenue | Datasets | 12 | |||||||||
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| Initial Reporting Deadlines | Demographic Reporting/Business Ownership | 7 | |||||||||
| Concurrence with Other Comments | Disposition to Non-Profit Affliate | 1 | No change was made to treatment of loan purchases and participations. The QSR counts lending activity on a originations basis and not a balance sheet basis. Treasury has determined that a purchase or participation in a loan does not meet the criteria to be counted as an "origination." | ||||||||
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| Reporting Burden | Purchases and Participations | 2 | |||||||||
| Other | Reporting Burden | 17 | |||||||||
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| File Modified | 0000-00-00 |
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