Lafayette Reporter

Senator John Kennedy has introduced legislation to repeal a Consumer Financial Protection Bureau (CFPB) rule from the Biden administration. The rule enforces Section 1071 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, requiring financial institutions to gather specific personal information from small businesses seeking loans.

In 2023, Congress passed Kennedy’s resolution under the Congressional Review Act aiming to overturn this rule. However, President Joe Biden vetoed the resolution, keeping the regulation active. According to Kennedy, "President Biden’s woke CFPB put small business owners’ information at risk by requiring their personal details to be exposed online. My bill would repeal the last administration’s misguided regulation so that job creators’ private information isn’t public, and government doesn’t stand in the way of Main Street’s access to loans."

Representative Roger Williams has introduced a similar bill in the House of Representatives.

The CFPB finalized this rule on March 30, 2023, which was later published on May 31, 2023. It mandates financial institutions to collect data such as race, ethnicity, sex of business owners, and whether a business is minority-owned or women-owned when they apply for credit. Some parts of this data could be made public by the CFPB.

To comply with this rule, banks must gather various applicant details including census tract and industry classification. This applies to institutions that have originated at least 100 small business loans annually over two years. Compliance deadlines are set for October 1, 2024; April 1, 2025; or January 1, 2026 depending on transaction volumes.

The definition of a small business under this rule is one with $5 million or less in revenue from the previous fiscal year. Concerns about data security have been raised due to a recent breach affecting personally identifiable information of thousands of consumers.

The implementation may affect credit availability for small businesses due to increased compliance costs for lenders. The bill is co-sponsored by Senators Cindy Hyde-Smith, Joni Ernst, John Boozman, Roger Wicker, John Barrasso, Mike Rounds, Steve Daines and Ted Cruz.