WASHINGTON—Two senators are expressing concerns over two proposed rules issued by the Small Business Administration that would change regulations governing SBA's 7(a) Loan Program and 504 Loan Program and to allow fintech lenders to offer 7(a) loans.
Senate Small Business and Entrepreneurship Committee Chairman Ben Cardin (D-MD) and Ranking Member Joni Ernst (R-IA) wrote to the Small Business Administration (SBA) to share what worries them about the plan.
“The sweeping changes contained in these two rules would substantially overhaul SBA’s lending programs by permitting new program participants and changing the current guardrails of the programs, something that comes dangerously close to authorizing through the regulatory process,” the legislators wrote. “Let us be clear: Congress has not authorized any loosening of prudent underwriting or affiliation standards.”
A Call for Controls
The senators called for putting controls in place.
“SBA must strongly consider prudent guardrails that can be demonstrated to be successful, before making changes that could impact the fiscal integrity of overall SBA lending programs. We urge the SBA to work closely with congressional committees. The SBA should address these concerns before publishing final rules.”
The letter was sent in response to the SBA’s two proposed rules: The Affiliation and Lending Criteria for the SBA Business Loan Programs, 87 FR 64724, and Small Business Lending Company (SBLC) Moratorium Rescission and Removal of the Requirement for a Loan Authorization, 87 FR 66963. These proposed rules would loosen key 7(a) program requirements and remove critical safeguards designed to prevent fraud and abuse.
New Representative Sworn In
Separately, Rep. Jennifer McClellan (D-VA) has been sworn in as the newest member of Congress.
McClellan is the first Black woman elected to represent Virginia and was elected in February to fill in the seat left open by the late Rep. Donald McEachin.
"Congresswoman McClellan’s familiarity with credit union issues, and knowing she received her first car loan from a credit union, means she understands very clearly the credit union impact for her constituents and consumers across the country,” said Jason Stverak, CUNA deputy chief advocacy officer for federal government affairs. “We’re excited to work with her in Washington, D.C., on credit union priorities.”
McClellan was supported by both the Credit Union Legislative Action Council (CULAC) and the Virginia Credit Union League, who worked with her during her time in the Virginia General Assembly, CUNA noted.
‘Engaged’ With CUs
"We look forward to working with the Congresswoman on credit union issues as she represents the interests of Virginia in Congress," said Virginia Credit Union League President/CEO Carrie Hunt. "As a state lawmaker, she was always willing to engage with us on issues of concern to credit unions and we thank her for her leadership and service.
CUNA noted that McClellan is a longtime credit union member who had served in the Virginia General Assembly since 2006. She was a member of the House Commerce and Labor Committee, which deals with most legislation related to credit unions and financial services issues.
Bill Would Place CFPB Under Appropriations Process
Meanwhile, CUNA is expressing support for a bill that would bring the Consumer Financial Protection Bureau (CFPB) into the appropriations process and turn it into an independent agency. Rep. Andy Barr(R-KY) introduced the "Taking Account of Bureaucrats’ Spending (TABS) Act," which comes after the 5th U.S. Circuit Court of Appeals found the Bureau’s funding mechanism unconstitutional.
“We thank Rep. Barr for his legislation, which supports CUNA’s longstanding position that the CFPB is funded through the appropriations process. The CFPB’s actions and policies impact a massive part of the global economy, and we support actions to make the agency more transparent and accountable,” said CUNA President/CEO Jim Nussle.
“Congressman Barr is a tireless champion of regulatory relief and has demonstrated his commitment to battling burdensome regulatory overreach, said Kentucky Credit Union Leagues President/CEO Debbie Painter. “This bill is another example of those efforts. We look forward to working with Congressman Barr and his team on this bill and others to promote growth and fairness within the financial industry.”
Specifically, the bill would:
- Place the CFPB under the appropriations process.
- Turn the CFPB into an independent agency called the Consumer Financial Empowerment Agency.
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