trio of Republican lawmakers from US House of Representatives working to try and block the new small business loan rule recently unveiled by 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 stop implementation of the new rule. Which is going to be implemented in October 2024.
,[…] Congress rejects rule by the Consumer Financial Protection Bureau relating to ‘Equal Credit Opportunity’ relating to small business lending, and such rule shall be of no force or effect,” a draft of the resolution released by Rep. Williams’ office read, states.
According to Rep. Williams, the new rule attacks small businesses — and it’s happening amid economic hardship caused by inflation.
,[The] The new rule is a continued assault on Main Street America,” Rep. Williams said in a statement. “Every day, small businesses struggle with rising costs, rising interest rates and ongoing labor shortages, and this new rule only builds on those issues. We cannot allow the CFPB to continue with burdensome requirements without considering their impact on small businesses and lenders.
Rep. Barr said the new rule also goes outside the scope of the CFPB’s founding mandate.
“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 finalized by Director Chopra would unnecessarily impose a massive new burden on financial institutions.” That will increase costs and reduce credit availability 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, said Rep. Ogles.
“This will not only increase costs for small businesses but also create an extensive, cumbersome information collection process,” said Rep. Ogles. “The CFPB should allow financial institutions to do their jobs instead of encroaching on their potential to prosper.”
On March 31, the CFPB finalized the rule on small business lending, which, according to the bureau, fulfills a mandate from Congress and aims to increase transparency while reducing discrimination.
In an announcement about the rule, the CFPB said, “Lenders will collect and report information about small business credit applications they receive, including geographic and demographic data, lending decisions, and cost of credit.”
The CFPB has been investigating this issue for several years. Former CFPB director Richard Cowdrey noted in 2017 that small business loan requirements should be similar to those of the mortgage industry, which drew a mixed response.
