Sen. John Kennedy (R-La.) introduced a joint resolution of disapproval (S.J.Res.32) to rescind a rule finalized by the Consumer Financial Protection Bureau (CFPB) that authorizes an invasion of small businesses’ privacy. The rule also contains overbearing reporting requirements to ultimately force banks and credit unions to finance certain small businesses over others. This rule is a perfect example of the government picking winners and losers.
Forty-five senators have cosponsored the resolution to repeal the CFPB’s final rule. S.J.Res.32 is expected to be considered on the Senate floor this week.
The rule’s origin is in section 1071 of the Dodd-Frank Act.
ATR criticized the rule before it was finalized. The primary reasons for ATR’s opposition to the rule and support for Sen. Kennedy’s resolution are outlined below:
- The CFPB’s rule will not enable increased credit access to minority-owned and women-owned small businesses. Instead, capital will dry up and no credit will make its way to traditionally under-capitalized businesses. In 2017, the Treasury Department published a report on financial regulation in the United States and recommended repealing section 1071 outright.
- The rule would establish a government-run database that would house information on small businesses, particularly, minority-owned and women-owned businesses.
- The rule exposes small businesses’ personally identifiable information by requiring the reporting of information such as the sex, race and ethnicity of the loan applicant; the amount of the credit transaction; the gross annual revenue of the business; the census tract in which the business is located; “the 3-digit North American Industry Classification System (NAICS) code for the applicant; the number of workers that the applicant has; the applicant’s time in business; and the number of principal owners the applicant has.”
- The CFPB will likely use the data it collects as a precursor to issuing future regulations that will force banks and credit unions to only lend to certain small businesses without any consideration for risk.
ATR supports Sen. Kennedy’s joint resolution of disapproval and urges members to vote in support of S.J.Res.32.