A trio of Republican lawmakers from US House of Representatives are working to try to block the new small business loan rule that was recently introduced 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) inserted a disapproval resolution to try to stop the implementation of the new rule, which is scheduled to go into effect in October 2024.
“[…] Congress disapproves of the rule introduced by the Bureau of Consumer Financial Protection related to “Equal Credit Opportunity Small Business Loans,” and such rule shall have no force or effect,” a draft of the resolutionpublished by the office of Rep. Williams, it states.
According to Representative Williams, the new rule constitutes an attack on small businesses, and it is occurring amid economic difficulties caused by inflation.
“[The] the new rule is an ongoing attack on Main Street America,” Rep. Williams said in a statement. “Every day, small businesses struggle with rising costs, rising interest rates, and continued labor shortages, and this new rule just builds on those issues. We cannot allow the CFPB to continue to add burdensome requirements without considering their impact on small businesses and lenders.”
The new rule also extends beyond the scope 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 loan data, the rule finalized by Director Chopra will unnecessarily impose massive new burdens on financial institutions that will increase the cost and decrease the availability of credit for millions of Main Street borrowers and business owners,” he said. Rep. Barr. in a sentence.
In addition, the new reporting requirements specified in the rule are a burden on business owners, Rep. Ogles said.
“This would not only increase the cost for small businesses, but it would also create a cumbersome and extensive information-gathering process,” said Rep. Ogles. “The CFPB should let financial institutions do their job instead of encroaching on their potential to thrive.”
On March 31, the CFPB finalized the small business loan rule, which fulfills a congressional mandate and is intended to increase transparency and mitigate discriminationaccording to the table
“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 a advertisement about the rule
The CFPB has been examining this issue for several years. Former CFPB Director ricardo cordray noted in 2017 that small business loan requirements should reflect those in the mortgage industry, which attracted a mixed response.
