Republicans aim to overturn the Consumer Financial Protection Bureau’s (CFPB) 1071 Small Business Lending Rule, saying the rule is overly burdensome for small businesses and the lenders who serve them.
“To sum it up, this rule is a backwards-looking, anti-small business solution in search of a problem,” Rep. Roger Williams, chairman of the House Committee on Small Business and a senior member of the House Financial Services Committee, said Friday (Dec. 1) in opening remarks before debate on a resolution, S.J.Res. 32, to overturn the rule.
The CFPB’s 1071 rule would make credit less affordable and less available to small businesses, Williams said.
For one thing, the rule is overly broad, requiring lenders to collect “massive amounts” of data when small business owners apply for credit, Williams said. Most of this information is unnecessary, and collecting it infringes on the applicant’s right to privacy.
Another objection to the rule is that it is burdensome, which has the greatest impact on small community financial institutions that are already operating under thin margins, Williams said.
“The rule also discourages banks and credit unions from expanding their lending portfolios,” Williams said. “They might simply decide the droves of new compliance officers they would have to hire to comply with this onerous rule would simply not be worth it.”
The CFPB’s rule will be difficult to implement, as it totals 900 pages and requires the reporting of 81 data fields, Williams added. He also objected to what he described as an insufficient timeline for implementation and to the CFPB’s plans to publicly post the data on its website.
“Adding to these concerns is the CFPB’s abysmal track record of protecting the highly sensitive data it already collects,” Williams said. “In fact, back in February of this year, there was a major unauthorized data breach by a CFPB employee, which included personally identifiable information and confidential supervisory information.”
In May, Rep. Maxine Waters and Rep. Nydia Velázquez said in a letter to CFPB Director Rohit Chopra that “the small business lending market is relatively opaque, but once these small business lending rules take effect, we will finally have actionable data that the public, industry and policymakers can use to identify ways to foster small business growth and development.”