Battle Over CFPB Small Business Data Collection Continues After Senate Vote

The battle over the Consumer Financial Protection Bureau’s (CFPB) efforts around small business data collection continues following a Senate vote to reverse that rule.

The Senate voted Wednesday (Oct. 18) to overturn a CFPB rule that would require lenders to report demographic data on the recipients of their small business loans, Politico reported Wednesday.

Those who voted to invalidate the rule said it would be intrusive and would allow regulatory overreach, according to the report. Those who support the rule and voted against overturning it said the gathering of this lending data would provide greater transparency and help ensure loans are distributed equitably.

The White House threatened to veto the bill, and the House has not yet voted on the resolution, the report said.

Rep. Maxine Waters, D-Calif., the ranking member of the House Financial Services Committee (HFSC), said in a Friday (Oct. 20) press release that she is disappointed in the Senate vote and that CFPB rule would reduce barriers to growth for entrepreneurs, especially those who are women and people of color.

“Despite today’s disappointing vote, I will continue to fight against any effort to advance this harmful legislation in the House, and if it were to reach President Biden’s desk, I am pleased he has already made clear that he will promptly veto it,” Waters said in the release. “I urge my colleagues on both sides of the aisle to stand with our nation’s small businesses by supporting market transparency that will help lower costs and ensure fair lending opportunities for all small businesses.”

Sen. John Kennedy, R-La., who introduced the resolution of disapproval of the CFPB rule, said in a Wednesday press release that the rule would require covered financial institutions to collect certain personal information on applicants for small business loans and report it to the CFPB, which could make some of that information public in a way that would identify the applicant.

“Small business owners are already suffering too much under Pres. Biden’s inflation, and the CFPB’s rule only further burdens them and puts their personal data at risk,” Kennedy said in the release. “The House should move quickly to pass this resolution so that lenders can continue to support small businesses and avoid unnecessary compliance costs.”

The new rules were announced in March, with the CFPB saying that they would give the public key data on the small business loan market and ensure that small businesses are being served fairly.