Congress has voted to pass a Senate joint resolution to overturn the Consumer Finance Protection Bureau’s (CFPB’s) small business data rule.
The rule, which had been widely criticized, would have introduced new requirements to increase transparency in small business lending.
Lenders would have been required 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.
The rule had been criticized by banking groups including the American Bankers Association (ABA), which described it as “unnecessarily far-reaching" and may force some community banks to limit their small business loan programs if they were unable to meet the data reporting requirements.
The ABA applauded Congress’ decision to pass the Senate’s resolution to nullify the rule.
Rob Nichols, president and CEO of the ABA, said: “To be clear, America’s banks firmly support the goals of Section 1071 and the enforcement of the nation’s fair lending laws, but as we have said before, the rule as written is too far-reaching.
“It will harm the relationship banking model [CFPB] director [Rohit] Chopra often praises and actually discourage bank lending to small businesses given the cost to collect this data.”
The Independent Community Bankers of America (ICBA) also welcomed the result of the Congressional vote.
Rebeca Romero Rainey, ICBA president and CEO, said: “This important resolution admonishes intrusive and overly burdensome data collection and reporting requirements for small-business loans that would ultimately harm the women- and minority-owned small businesses the rule is designed to help.
“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.”
The final decision on the resolution will be made by President Biden, who has been urged by the ABA and ICBA to sign the measure into law.
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