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

The Senate voted 53-44 on Wednesday to overturn a Consumer Financial Protection Bureau (CFPB) rule that mandates financial institutions to collect personal information, including race and sex, from small-business borrowers. This move is seen as a blow to President Joe BidenÔÇÖs regulators and an attempt to curb the expanding regulatory state under his administration.

Introduced by Sen. John Kennedy (R-La.), the resolution was passed under the Congressional Review Act (CRA), which requires only a simple majority in the Senate. Senate Minority Leader Mitch McConnell (R-Ky.) lauded the resolution as a way to combat the Washington Democrats’ push for tying small-business loans to diversity quotas.

Companion resolution introduced in the House:
House Small Business Chairman Roger Williams (R-Texas) has introduced a companion resolution to overturn the CFPB rule in the House. The House Financial Services Committee advanced the resolution in July, but it is yet to be taken up on the floor for a vote.

The purpose of the CFPB rule:
The CFPB rule, finalized in April, necessitates financial institutions to report information about minority- and women-owned firms, as well as small businesses applying for loans. The intention behind the rule is to aid fair lending enforcement. This requirement stems from Congress’ 2010 financial regulatory overhaul law.

Supporters and opponents of the rule:
Democratic Sens. Joe Manchin III of West Virginia, John Hickenlooper of Colorado, and Jon Tester of Montana joined Republicans in voting to overturn the rule. Independent Sens. Kyrsten Sinema of Arizona and Angus King of Maine, who caucus with Democrats, also supported its repeal. Advocates of the rule argue that it promotes transparency in the small-business lending market and ensures a level playing field for entrepreneurs that have historically been overlooked by the financial industry.

Outlook and potential challenges:
The resolution is expected to garner strong support in the Republican-controlled House. However, the absence of a speaker in the House makes it uncertain when the resolution will be taken up for consideration. If President Biden were to veto the resolution, it would require a two-thirds majority in both chambers to override the veto.

How AI legalese decoder can help:
The AI legalese decoder offers assistance in deciphering complex legal language and understanding the implications of legal regulations. In the case of the CFPB rule, the Decoder can provide a simplified explanation of the rule’s requirements and the arguments put forth by its supporters and opponents. This would enable individuals and businesses to grasp the impact of the Senate’s decision and its potential consequences for fair lending practices and small-business owners.

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