GeoDataVision has been examining the latest (2024) CRA data to determine the impact of the NPR published by the FDIC and the OCC. We found some shocking statistics. In this post I will focus on one of those statistics. I will address other stunning numbers in subsequent posts.
The NPR proposes a draconian reduction in mandatory reporters.
According to the NPR the Agencies estimate that only 86 lenders regulated by the FDIC and the OCC will be classified as "large" banks, thereby making them mandatory CRA reporters.
For the year 2024, 731 CRA reporting institutions originated 8,736,431 small business loans. Of those reporters 528 that originated 8,467,429 small business loans were regulated by the FDIC or the OCC. In other words, reporters under CRA accounted for nearly 97% (96.92%) of FDIC- and OCC-regulated lenders reported small business loans originated during 2024.
Now comes a shocking statistic.
Of those 528 CRA-reporters, only 2 accounted for 53.3% of all small business loan originations reported to the FDIC and the OCC for 2024.
Who were the 2 lenders that originated substantially more than half of all reported small business lending for 2024?
Answer: American Express reported 2,295,113 SB originations accounting for 27.1% of all reported small business lending and JPMorgan Chase Bank extended 2,219,044 small business loan originations or 26.2% of all small business loans reported to the FDIC and the OCC.
Since small business loans reported by FDIC and OCC-regulated reporters accounted for 96.9% of all small business loans reported to all 3 agencies, the small business loan share for AMEX and JPMorgan account for more than 50% of all reported small business lending to all 3 agencies.
The activity of only 2 leading small business lenders dominates the small business lending benchmarks almost everywhere in the US.
And that influence will increase with the proposed shrinkage of mandatory reporters.
The NPR is an illusory form of regulatory relief and is really a step backwards for all banks because the lending standards to which they will be held accountable are already dramatically influenced by only 2 mega-lenders, one of which is a credit card lender and will be even more influenced by those lenders if the number of mandatory reporters declines as proposed in the NPR.
In fact, the #5 leading lender of small business loans for 2024 was Capital One, another credit card lender that reported 510,041 small business loans.
Any bank subject to CRA should report under CRA.
After all, they will be examined for their performance under the regulation.
Everyone is handicapped by a lack of peer data because so many banks don't report under CRA. Relief from reporting is not relief from performing!
The annual cost of collecting the data should be less than $3,000 for a community bank. The FFIEC provides free CRA software. Data entry time should not exceed 20 hours for most community banks.
Cost is not a legitimate objection.
