Three Republican congressmen introduced legislation that seeks to protect small banks and lenders from certain compliance standards.
The Small LENDER Act (H.R. 6732) — introduced by U.S. Reps. French Hill (R-AR), Blaine Luetkemeyer (R-MO), and Roger Williams (R-TX) — would codify “financial institution” as one that originates at least 500 covered transactions in each of the last two years. This is a change from the 25-transaction threshold proposed by the Consumer Financial Protection Bureau in a recent rulemaking.
The bill also codifies “small business” as one with gross annual revenues of $1 million or less in the last year instead of $5 million or less as defined in the CFPB’s proposal.
“Access to capital for small businesses is the lifeblood of our local communities, and smaller lenders often lead the way in investing in the neighborhoods they serve. However, the Consumer Financial Protection Bureau’s (CFPB) proposed regulation would actually hurt small businesses by making the cost of credit more expensive and imposing significant compliance costs that fall disproportionately on smaller companies. That’s why we are proud to introduce this bill to provide regulatory relief to community banks and other small business lenders,” Hill, Luetkemeyer, and Williams said in a joint statement.
In addition, the bill extends the effective compliance date with the final rule to be three years after publication in the Federal Register plus a two-year grace period, as opposed to the proposed 18-month implementation period.
“In the absence of Congress repealing Section 1071 of Dodd-Frank, our bill makes necessary changes to exempt smaller banks and other lenders from having to comply with the CFPB small business data collection regulation,” the lawmakers added.