Congress votes 33-to-23 to impede the CFPB's data gathering regulation
In a significant development, the Consumer Financial Protection Bureau (CFPB) has issued a small-business data collection rule, aimed at expanding access to credit for small businesses and ensuring accountability in lending to minority communities. However, the rule has been met with controversy and is currently under scrutiny.
The rule, passed in March, seeks to collect 81 pieces of information from small-business owners when they apply for loans. Proponents argue that this data would help fight unlawful discrimination, while detractors view it as intrusive.
The CFPB's small-business data collection rule has been a contentious issue in Congress, with Sen. John Kennedy, R-LA, introducing a resolution to repeal the rule via the Congressional Review Act in June. The Senate voted on Wednesday to repeal the rule by a 53-44 tally, with three Democrats and two independents who caucus with Democrats also voting in favour.
In the House, Rep. Roger Williams, R-TX, has introduced a resolution to nullify the CFPB rule, but it faces stiff resistance. Notably, Rep. Jim Jordan, R-OH, failed to garner enough votes to become the speaker of the House on Wednesday.
Meanwhile, the Supreme Court is currently considering the constitutionality of the CFPB's funding, which could potentially impact the future of the small-business data collection rule. The White House has stated that President Joe Biden would not sign off on the resolution that challenges the CFPB rule using the Congressional Review Act.
A federal judge ruled in July that not all lenders need to obey the CFPB rule while the Supreme Court weighs in on the constitutionality of the agency's funding. This means that the rule is currently not being obeyed by all lenders.
Sen. Sherrod Brown, D-OH, countered the criticism, stating that borrowers can decline to submit the information if they wish. McAllen, Texas-based Rio Bank and the Texas Bankers Association filed a complaint against the CFPB in April, alleging that the data collection rule would hinder lending to nonwhite- and women-owned businesses.
As the debate continues, the future of the CFPB's small-business data collection rule remains uncertain. The House is not expected to vote on the repeal of the rule in the short term due to a leadership vacuum. Republicans, who have cast the vast majority of votes to repeal the rule, likely do not have enough votes to overrule the president's veto of the resolution to nullify the CFPB rule.
In the interim, it appears that the CFPB's small-business data collection rule will continue to be a topic of intense debate and legal scrutiny.
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