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Markup also aims to curb regulators’ implementation of Environmental, Social, and Governance policies.
The House Financial Services Committee on Thursday will mark up a resolution that seeks to void the CFPB’s rule requiring financial institutions to report their lending to women- and minority-owned businesses.
The agency was required to issue that regulation under the Dodd-Frank Act, but the rule itself has been roundly criticized by Republicans and financial services trade groups, including CUNA and NAFCU.
Although Republicans are likely to support the resolution, H.J. Res 66, it has little chance of being enacted, since it would require a signature from President Biden, who has supported the expansion of lending to women- and minority-owned businesses.
That resolution will be considered during a markup of several bills, including one to regulate stablecoins. Several others attempt to rein in regulators of public companies that make Environmental, Social and Governance (ESG) issues a priority.
Behind the Resolution
“The Consumer Financial Protection Bureau’s (CFPB) new rule is a continued attack on Main Street America,” said Rep. Roger Williams, R-Texas, as he introduced the resolution. “Each day, small businesses struggle with rising costs, increasing interest rates, and ongoing labor shortages, and this new rule only builds on those issues.”
Williams, chairman of the House Small Business Committee, added that policymakers cannot allow the CFPB to continue to add burdensome requirements without any consideration of their impact on lenders and small businesses.
Backstory and Context
The CFPB issued the final rule in March.
It requires credit unions and banks to report small business lending activity if the institution has made at least 100 covered loans in each of the two preceding calendar years.
Advocates praised the rule when it was issued.
“It is likely to result in increased lending to underserved businesses as lenders will now have to annually report on their lending broken down by race, ethnicity, gender and sexual orientation of the business owners,” said Kevin Hill, senior policy advisor at the National Community Reinvestment Coalition.
The resolution to void the lending rule was filed under the Congressional Review Act, a little-used process that allows Congress to nullify rules.
If the resolution passes the House, it then goes to the Senate, where it must be considered under an expedited procedure. It is uncertain whether the Democrat-controlled Senate would pass the resolution.
And even if the Senate did pass it, Biden presumably would veto it, with the House and Senate unlikely to have the super majority needed to override the veto.
What Other Bills Are Being Marked Up?
The House committee also will consider several other bills, including:
–H.R. 4823, which, among other things, would require federal banking regulators to notify the appropriate congressional committees before implementing any non-binding recommendation from the Financial Stability Oversight Council (FSOC) chairperson. The agencies, including the NCUA, would be required to submit a report containing implementation plans and justification for the rule.
FSOC, led by Treasury Secretary Janet Yellen, has been examining how ESG issues should be considered by financial institutions.
–H.R. 4649, which would add requirements when federal banking regulators adopt rules that implement policies of non-governmental organizations. The bill also would require reporting on certain climate-related interactions with covered international organizations.
Broader Aim to Curb ESG Efforts
Republicans made it clear they are aiming at reining in ESG efforts at federal agencies.
“ESG is an evil pollutant that must be eradicated from corporations and businesses,” Rep. Ralph Norman, R-S.C., said.
And Rep. Barry Loudermilk, R-Ga., said, “America’s banking regulators are implementing regulations on climate change in the form of environmental, social, and governance (ESG) policies, but the American people and Congress are being left in the dark as to how these policies are being formulated.”
CFPB
