At the recent Fair Lending Forum, we delved into the evolving landscape of consumer protection regulations, highlighting how states are increasingly stepping up their oversight. While federal mandates often capture the spotlight, the New York Department of Financial Services (NYDFS) with its Section 76.16 requirements stands out as a significant example of this trend. In today's dynamic financial environment, adaptability is key; our detailed work with the NYDFS data schema and exam reporting requirements offers valuable lessons that can help institutions proactively monitor and understand these crucial state-level mandates, ensuring compliance without disruption. The NYDFS's proactive stance on consumer protection serves as a strong indicator that similar state requirements are likely on the horizon.

Understanding NYDFS Section 76.16

The New York State Department of Financial Services enacted 3 NYCRR § 76.16 (Section 76.16) to implement its state Community Reinvestment Act (CRA). This regulation is pivotal because it outlines the requirements for how state-chartered banks must collect and report data related to their business lending activities.

A core focus of Section 76.16 is on understanding and promoting lending to Minority- and Women-Owned Businesses (MWOBs). The regulation mandates state-chartered banking institutions to gather and report detailed data on all business loan applicants, with a particular emphasis on those owned by minorities or women. This comprehensive data collection allows for a thorough analysis of lending patterns.

Ultimately, the NYDFS uses this data to assess how effectively banks are serving the credit needs of MWOBs. This goes beyond just counting loans; it's about understanding the full picture of how banks are supporting these businesses, including their access to capital and technical assistance. The goal is to ensure MWOBs have the resources they need to thrive and contribute to the New York economy.

For those familiar with the planned use of CFPB's small business data collection for CRA exams under the to-be-rescinded federal CRA Final Rule, the NYDFS approach will sound familiar. While the federal rule is off the table, this approach remains relevant for New York state-chartered banks.

The NYDFS has provided valuable resources, including a workbook with specific expectations for reporting institutions and a comprehensive FAQ section. These resources are incredibly helpful in understanding the intricacies of the state’s data collection requirements as impacted institutions navigate the data schema and reporting requirements.

Key Learnings from the NYDFS Data Collection and Reporting

Our deep dive into the NYDFS data schema revealed several important considerations for institutions:

• Expanded Data Fields: The NYDFS data schema includes specific fields that were not part of the federal CFPB's 1071 rule. This highlights the need to capture additional, unique data elements to ensure full compliance with state-specific requirements.
• Coding and Formatting Nuances: While building upon existing federal frameworks, the NYDFS introduced its own unique coding and formatting specifications for certain data fields. Recognizing and accommodating these differences is crucial for accurate reporting.
• Leveraging Existing Validation Logic: Although the NYDFS did not release its own specific data validation rules, leveraging the well-established data validation logic from the federal CFPB's 1071 rule is a proactive approach. This helps in identifying and flagging potential data errors early and ensuring the accuracy and reliability of reporting.
• Streamlined Data Handling: The need for updated import and export formats, specifically designed for the NYDFS data requirements, became evident. Efficient and compatible formats streamline the entire process of bringing data into a system and preparing final reports for submission.

The lessons learned from navigating the NYDFS 76.16 data schema and exam expectations offer a blueprint for understanding and adapting to the growing landscape of state-level consumer protection regulations. By focusing on these key areas, financial institutions can better prepare for current and future compliance challenges.

By Sarah Brons, Product Leader, CRA & 1071 SBL Products, RiskExec

Sarah Brons is Product Leader, CRA & 1071 SBL Products for RiskExec, Inc. Sarah brings in-depth community development and CRA compliance expertise developed through experience in bank examining, bank CRA program development, and industry engagement.

Sarah joined RiskExec from American Express where she served in the American Express National Bank Center for Community Development as Director leading the CRA Grant and Service Programs. She previously held Community Development Officer and CRA Officer positions in two other large banks.

Prior to joining her roles in banks, Sarah served as a bank examiner with the Office of the Comptroller of the Currency where her responsibilities included conducting CRA exams for banks of all sizes. Sarah earned her BSBA from the University of Nebraska at Omaha.