Preventing Regulatory Overreach to Empower Communities to Thrive and Ensure Data Privacy Act; PROTECTED Act
Summary
The PROTECTED Act aims to amend the Equal Credit Opportunity Act by modifying data collection requirements for small business loans. It seeks to reduce regulatory burdens on financial institutions and enhance data privacy for small business loan applicants. The bill includes provisions to limit the type of data collected and provide applicants with more information about the data collection process.
Expected Effects
If enacted, the PROTECTED Act would change how financial institutions collect and report data related to small business loans. It would likely reduce the amount of data collected and provide a safe harbor period for compliance. The changes could affect the availability of certain data used for regulatory oversight and fair lending enforcement.
Potential Benefits
- Reduced Regulatory Burden: Eases compliance requirements for financial institutions, particularly smaller ones.
- Enhanced Data Privacy: Protects applicants by limiting data collection and ensuring transparency.
- Focus on Applicant-Provided Data: Prevents institutions from using visual observation or other means to gather information.
- Safe Harbor Period: Provides a grace period for institutions to adjust to the new requirements.
- Exemptions for Certain Institutions: Excludes smaller institutions and those involved in specific types of financing.
Most Benefited Areas:
Potential Disadvantages
- Reduced Data Availability: Limiting data collection could hinder efforts to monitor lending disparities and enforce fair lending laws.
- Potential for Reduced Oversight: The safe harbor period and exemptions may delay or diminish regulatory oversight.
- Impact on Data Analysis: Modifications and deletions of data could affect the accuracy and completeness of data analysis.
- Uncertainty Regarding Cost-Benefit Analysis: The effective date is tied to a cost-benefit analysis, which could delay implementation.
- Possible unintended consequences: Changes to data collection could have unforeseen impacts on credit access for some small businesses.
Most Disadvantaged Areas:
Constitutional Alignment
The bill's focus on modifying data collection requirements does not directly implicate specific constitutional provisions. However, the emphasis on data privacy could be seen as aligning with broader principles of individual liberty, though not explicitly mentioned in the Constitution. The bill's impact on equal opportunity in lending could potentially relate to the Equal Protection Clause of the Fourteenth Amendment, depending on how the changes affect different groups of borrowers.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).