A trio of Republican lawmakers from the U.S. House of Representatives are working to try and block the new small business lending rule that was recently unveiled by the Consumer Financial Protection Bureau (CFPB).
Last week, Rep. Roger Williams (Tex.-25), Rep. Andy Barr (Ky.-06) and Rep. Andy Ogles (Tenn.-05) introduced a resolution of disapproval to try and halt the implementation of the new rule — which is scheduled to go into effect in October 2024.
“[…] Congress disapproves the rule submitted by the Bureau of Consumer Financial Protection relating to ‘’Small Business Lending Under the Equal Credit Opportunity,’ and such rule shall have no force or effect,” a draft of the resolution, released by Rep. Williams’ office, states.
According to Rep. Williams, the new rule constitutes an attack on small businesses — and it’s happening in the midst of economic hardship caused by inflation.
“[The] new rule is a continued attack on Main Street America,” Rep. Williams said in a statement. “Each day, small businesses struggle with rising costs, increasing interest rates, and ongoing labor shortages, and this new rule only builds on those issues. We cannot allow the CFPB to continue to add burdensome requirements without any consideration of their impact on small businesses and lenders.”
The new rule also extends beyond the purview of the CFPB’s founding mandate, Rep. Barr said.
“While Section 1071 of the Dodd-Frank Act directed the Bureau to adopt a regulation governing the collection of small business lending data, the rule as finalized by Director Chopra will unnecessarily impose massive new burdens on financial institutions which will increase the cost and decrease the availability of credit for millions of Main Street borrowers and entrepreneurs,” Rep. Barr said in a statement.
In addition, the new reporting requirements specified in the rule are burdensome for entrepreneurs, Rep. Ogles said.
“This would not only increase the cost to small businesses but also create a broad, burdensome information collection process,” said Rep. Ogles. “The CFPB should let financial institutions do their job instead of encroaching on their potential to prosper.”
On March 31, the CFPB finalized the rule on small business lending, which fulfills a mandate from Congress and aims to increase transparency while mitigating discrimination, according to the Bureau.
“Lenders will 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 CFPB said in an announcement about the rule.
The CFPB has been examining this issue for several years. Former CFPB Director Richard Cordray noted in 2017 that small business lending requirements should mirror those of the mortgage industry, which drew a mixed response.
