The Senate has passed a resolution to nullify the Consumer Financial Protection Bureau’s (CFPB’s) reporting requirements for small businesses.
The rule requires lenders to collect and report information about the small business credit applications they receive, including geographic and demographic data, lending decisions, and the price of credit.
It was designed to increase transparency in small business lending, promote economic development, and combat unlawful discrimination.
When the rule was proposed, CFPB Director Rohit Chopra said: “Many local businesses were shuttered during the COVID-19 pandemic after they struggled to obtain credit under the Paycheck Protection Program. This small business loan census will give the public key data on this market to ensure that banks and nonbanks are serving small businesses fairly.”
The ICBA had since criticized the rule as being too stringent for small businesses and the organization has welcomed the passing of the Senate resolution.
ICBA President and CEO Rebeca Romero Rainey said: “The CFPB’s data collection requirements would significantly degrade the ability of community banks to meet the needs of small businesses while requiring financial institutions to burden their customers with invasive and personal questions the CFPB would then publicly report.”
She added the resolution “rebukes intrusive and overly burdensome data collection and reporting requirements” and argued it would ultimately harm the businesses it is designed to help.
To overturn the CFPB’s rule, the resolution would also need to be approved by the House of Representatives and then signed by the president.
An identical resolution has been introduced in the House and has passed out of committee, but President Biden is expected to veto the legislation.