WASHINGTON–The House has passed a credit union-supported resolution of disapproval for the Consumer Financial Protection Bureau’s Section 1071 rule. The resolution, which was passed by the Senate in October, will now head to President Biden, who is expected to veto it.
Currently, the rule is suspended until the Supreme Court rules on the constitutionality of the Bureau’s funding structure.
The rule, which was finalized in March by the Bureau, requires credit unions and other financial institutions to collect and report certain data on applications for credit for women-owned, minority-owned, and small businesses.
‘Well-Intentioned, But…’
“We thank Congress for recognizing that, while this rule may be well-intentioned, its real-life impact will harm the small business borrowers and consumers the CFPB aims to protect,” said CUNA President/CEO Jim Nussle. “The overly broad scope of this rule would lead to higher costs for covered financial institutions and small businesses around the country, which is why credit unions continue to push back against this rule wherever possible.”
As CUToday.info reported earlier, CUNA, the Cornerstone League, and Rally Credit Union in Corpus Christi, Texas were successful in their court challenge to the rule, which resulted in a nationwide stay for all covered entities.
Not Everyone Agrees
Not everyone is pleased with the House action. In a statement, Carolina Martinez, CEO of CAMEO, a California-based, statewide micro-business network representing businesses with one to five employees, said, “Today’s vote by the U.S. House of Representatives to overturn a Consumer Financial Protection Bureau (CFPB) rule requiring collection and reporting of demographic data for small business loan recipients is yet another blow to fairness and transparency in small business financing. The CFPB rule, which was finalized under Section 1071 of the Dodd-Frank Act, would provide much-needed insight into who does – and doesn’t – receive small business financing, unearthing potential patterns of discrimination.”
Martinez went on to blame the “banking lobby” for fighting implementation of Section 1071, adding, “By fighting so hard to avoid disclosing demographics in small business lending, one must wonder what it is that banks want to hide. Transparency in small business lending is especially needed as resources for diverse businesses, e.g. the SBA’s 8(a) program and Fearless Fund, are under legal attack.”