Based on our reviews of CRA Performance evaluations, the Agencies appear to be putting much more emphasis on the D&B small business demographic data for measuring performance under the Borrower Characteristics test administered during a CRA exam. I find it appalling that the Agencies are using a proprietary source of data that in my opinion is notoriously unreliable. For example, I have a client that serves the Los Angeles, San Bernardino, Riverside and Orange county markets. The D&B data for 2007 show 1,259,280 businesses located in those 4 counties. The Census Bureau County Business Patterns database show only 413,524 businesses active in those same counties that year. The D&B data for the following year, 2008, when a major recession was beginning, indicate that an additional 145,000 businesses were doing business in the same market. Not only is the D&B data questionable, if not misleading. it also is expensive. I think it is wrong for the regulators to use unreliable data extracted from a commercial source that effectively gives the source a monopoly on the data.

What has been the experience of BOL readers with respect to this issue and what are your thoughts? Should we organize a letter writing campaign to ask the Agencies to make the data public or to use the more transparent, free and reliable Census data? (The Census data is updated annually, but normally 2 years in arrears)

I have to agree with you. The agencies are making this comparison more and more an important element in the exams. The data is extremely expensive and is not based in reality at all, nor is it validated in any way.

...not based in reality....nor is it validated.....

the above makes perfect sense for its use then...



I would like to hear how many banks are not members of D&B. Am I wrong in assuming most commercial banks' underwriting standards include the D&B report?

This is similar to the use of that CRA software the FDIC uses, and by default all banks examined by the FDIC feel they must use it too.

But does purchasing D&B reports (many banks do not do this anymore due to expense and feeling it is not necessarily accurate since again data is not validated) entitle the bank to the demographic data sold by another arm of D&B?

I will find out KB. I am certain our lenders can't bring a loan to committee unless they have reviewed the D&B.

But I don't know what membership entitles the bank to from other parts of D&B.

This has been driving me up the wall. On our last PE, they took the gross annual revenues on our small business loans, broke them down into 5 categories (instead of just greater or less than $1 MM) and then compared it to D&B data purporting to show how many business in our AA fell into these categories. Some of our performance was considered "marginally adequate."

Now I'm trying to do a similar evlauation for our annual self assessment and not only can I not get updated D&B data (we're not springing for it), but there is not way to do a peer evaluation - which to me, is the most important way of judging performance.

If you don't mind me asking JS, who is your regulator?

I'm just curious if we will have the same problem as my FI is in the same region as you.

I have dealt with this with several clients; I mostly see it with West Coast FDIC (especially the division into 5 categories) vs the 3 normal CRA breakouts.

There is no way to know if this info used for comparison has any validity at all, yet banks are judged against it.

FDIC just finished our CRA and Fair Lending exam this past Friday, they did not use D&B. But, that doesn't mean they are not or will not do it in other exams

We're FDIC

I worked for D&B in the early 80's. I saw how some of that business "information" wound up in their database. I don't know if they cleaned up the process since then, but I personally wouldn't put much stock in it.

I agree with Len and find it APPALLING that a regulatory agency would use a private source UNLESS they can show they have done spent the time to validate that data. And if they have, then that raises even more ethical questions for me.