Senate Votes to Overturn Rule Requiring Personal Information on Small-Business Borrowers

In a recent vote, the Senate has overturned a Consumer Financial Protection Bureau (CFPB) rule that required financial institutions to provide personal information on small-business borrowers, including race and sex. The Senate voted 53-44 in favor of the resolution introduced by Senator John Kennedy (R-La.) under the Congressional Review Act, which allows Congress to invalidate certain federal regulations. This move has been seen as a blow to President Joe Biden’s regulatory agenda.

Senate Minority Leader Mitch McConnell (R-Ky.) praised the resolution, stating that it was a necessary step to combat the Biden administration’s excessive regulatory state. McConnell criticized the Democrats’ approach of linking small-business loans to diversity quotas, suggesting that it was an unnecessary burden on financial institutions.

The resolution to overturn the CFPB rule has also gained support in the House, with House Small Business Chairman Roger Williams (R-Texas) introducing a companion resolution. However, it has not been taken up on the floor for a vote yet.

The CFPB rule, which was finalized in April, aimed to improve the enforcement of fair lending rules by requiring financial institutions to report information about minority- and women-owned firms, as well as small businesses seeking loans. This rule was mandated by Congress in the 2010 financial regulatory overhaul law.

Several Democratic senators joined their Republican counterparts to vote in favor of overturning the rule, including Joe Manchin III of West Virginia, John Hickenlooper of Colorado, and Jon Tester of Montana. Independent senators Kyrsten Sinema of Arizona and Angus King of Maine, who caucus with the Democrats, also voted to overturn the rule.

Senate Banking Chairman Sherrod Brown (D-Ohio) defended the CFPB rule, emphasizing the need for transparency in the small-business lending market and leveling the playing field for entrepreneurs who have traditionally been overlooked by the financial industry. Brown argued that the rule would provide valuable data on how lenders serve their communities and identify any disparities in lending practices.

While the resolution is anticipated to receive strong support in the Republican-controlled House, the absence of a speaker makes it uncertain when the chamber will take it up for a vote. If President Biden chooses to veto the resolution, it would require a two-thirds majority in both chambers of Congress to override the veto.