The U.S. Senate passed a resolution that seeks to block the Consumer Financial Protection Bureau’s (CFPB) small business data collection rule.
The rule requires covered financial institutions to collect and report certain personal information on small business loan applicants and report that to the CFPB. This information includes an applicant’s race, ethnicity, and sex and whether the business is minority-owned, women-owned or LGBT-owned. The goal was to enable communities, governmental entities, and creditors to identify business and community development needs and opportunities for women-owned, minority-owned, and small businesses.
However, U.S. Sen. John Kennedy (R-LA), who offered the resolution, is concerned that the CFPB may then make certain parts of that information public, including data that could publicly identify the small business credit 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. The House should move quickly to pass this resolution so that lenders can continue to support small businesses and avoid unnecessary compliance costs,” Kennedy said.
In August, Kennedy was a group of lawmakers who sent a letter to CFPB Director Rohit Chopra, urging the bureau to pause its data collection rule while the courts determine the validity of the rule, which stems from implementation of Section 1071 of the Dodd Frank rule.
The Independent Community Bankers of America (ICBA) applauded the Senate for its vote and urged the full Congress to block the rule.
“The CFPB’s data collection requirements would significantly degrade the ability of community banks to meet the needs of small businesses while requiring financial institutions to burden their customers with invasive and personal questions the CFPB would then publicly report,” ICBA President and CEO Rebeca Romero Rainey said.
The resolution now moves to the House of Representatives for consideration.