Senate Votes to Kill CFPB Lending Rule; Biden Promises Veto
Opposed by credit union groups, rule already has been placed on hold by federal judge.
In what amounted to a symbolic move, the Senate voted Wednesday to kill the CFPB’s small business lending rule.
Voting 53–44, the Senate adopted S. J. Res. 32, using the Congressional Review Act, which allows Congress to kill major agency rules. The Republican-controlled House has not voted on a companion resolution, but even if it does pass, the resolution still requires the signature of the president.
And President Biden on Wednesday said he would veto the resolution if the House passed it and it came to the White House for his signature.
What Does the Rule Entail?
The rule, which would implement Section 1071 of the Dodd-Frank Act, would require lenders to report their small-business lending to women-owned and minority-owned businesses.
Credit union trade groups have said the regulation would be too expensive to implement.
Beyond Congressional Intent?
Sen. John Kennedy, R-La., sponsor of the resolution, said on the Senate floor that the CFPB goes far beyond what Congress intended.
“The CFPB has taken our work and totally perverted it,” he said Wednesday.
He noted that lenders would be required to report information about such things as the race, gender and sexual orientation of the small business owners applying for loans.
However, in supporting the CFPB rule, Senate Banking Committee Chairman Sen. Sherrod Brown, D-Ohio, said that the federal government does not have the data it needs to evaluate how well lenders are serving small businesses in their communities.
“With this data, we’ll be able to see gaps in the small business lending market—allowing programs to expand access to credit for small businesses, like small businesses in rural areas,” Brown said.
What Comes Next?
The Biden Administration, in a Statement of Administration Policy, agreed, promising to veto the resolution that would kill the CFPB rule.
“The CFPB’s rulemaking will provide small business owners, lenders, and the public with critical information about the $1.7 trillion small business financing market. If enacted, this resolution would harm all those that stand to benefit from this expanded transparency and accountability,” the administration stated.
A Kentucky federal judge already has placed implementation of the rule on hold until the U.S. Supreme Court decides whether the CFPB’s funding mechanism is constitutional, since the agency is not funded through the appropriations process.