Watch Kennedy’s comments when the Senate passed the legislation in October here.
WASHINGTON – The House of Representatives today passed Sen. John Kennedy’s (R-La.) Congressional Review Act (CRA) resolution of disapproval to stop the Biden administration’s Consumer Financial Protection Bureau (CFPB) from enforcing its Dodd Frank Section 1071 small business data collection rule.
Rep. Roger Williams (R-Texas) introduced the resolution of disapproval in the House and led the effort to pass it in that chamber. It now moves to the president’s desk.
“By collecting and publishing personal demographic and other information, the CFPB is putting small business owners at risk of having their private financial affairs exposed to a watching world. Reporting these personal details is an invasion of privacy and a waste of resources in service of the CFPB’s woke agenda. This rule could hamstring lending to Main Street. The House is protecting Americans’ privacy and job creators by passing Congressman Williams’s crucial resolution, and I hope President Biden signs this legislation quickly,” said Kennedy.
“I applaud the House for passing S.J.Res.32 condemning the CFPB’s relentless attack on Main Street America. Small businesses are the backbone of the American economy, and it is crucial that they can access affordable credit to support and grow our communities. During a time where small businesses are facing crushing inflation and increasing borrowing costs, it is important that we put an end to the CFPB’s broad, burdensome, and difficult to implement rulemaking. It is now Biden’s turn to listen to the American people and sign this bill into law instead of bowing down to out of touch unelected bureaucrats,” said Williams.
Section 1071 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 CFPB may then make certain parts of that information public, including data that could publicly identify the small business credit applicant.
In August, Kennedy led a letter to CFPB Director Rohit Chopra, urging the bureau to pause its 1071 data collection rule while the courts determine the validity of the Section 1071 rule.
On March 30, 2023, the CFPB promulgated the final rule implementing Section 1071 of the Dodd-Frank Act, which amends the ECOA. The rule was published in the Federal Register on May 31, 2023.
In order to comply with the Biden CFPB rule, financial institutions would have to collect information about applicants, including the applicant’s census tract, North American Industry Classification System and years in business—among other information.
- The rule applies to financial institutions that originated at least 100 small business loans in each of the two preceding calendar years.
- Based on the number of credit transactions for small businesses, covered financial institutions must comply with the final rule beginning Oct. 1, 2024; April 1, 2025; or Jan. 1, 2026.
- A small business is defined as a company with $5 million or less in revenue from the previous fiscal year.
Among the many concerns about the CFPB’s collecting and storing such personal information is that the agency recently experienced a data breach including the personally identifiable information of 256,000 consumers and failed to properly inform them for two months.
The implementation of this rule may also reduce the availability and accessibility of small business credit by increasing compliance costs of lenders.
In Oct. 2023, the Senate passed Kennedy’s Congressional Review Act resolution of disapproval of the CFPB rule to implement Dodd Frank Section 1071, which amends the Equal Credit Opportunity Act. In addition:
- Kennedy introduced the Small LENDER Act to protect Louisiana’s small businesses’ access to capital. The legislation would block the Biden administration’s CFPB from requiring community banks and lenders to collect and report social data—such as race, gender and ethnicity—from borrowers.
Text of Kennedy’s resolution is available here.
Video of Kennedy’s comments at the resolution’s Senate passage is here.