GOP lawmaker's bill would repeal small-business loan rules
A Republican congressman introduced legislation Friday to repeal a legal requirement — nine years old but yet to be implemented — that aims to address discrimination in small-business lending.
The bill from Rep. Roger Williams, R-Texas, has the support of the Consumer Bankers Association and the Independent Community Bankers of America. While it is unlikely to be passed by the Democratic-controlled House of Representatives, it lays down a marker in opposition to the 2010 measure.
That provision, which was part of the Dodd-Frank Act, calls for the collection of data that could be used to identify lending discrimination — similar to the longstanding requirement that residential mortgage lenders collect and report information about the race and gender of applicants.
The Consumer Financial Protection Bureau has yet to write rules that would implement the 2010 mandate. The agency still needs to make important decisions such as how much data will be collected, about which products and from which companies.
At a CFPB forum in November, financial industry representatives who spoke did not call for the provision’s repeal. In fact, some of them said that the long-awaited rules can help protect against discrimination and shine a light on unsavory practices in the market for small-business credit.
The bill introduced Friday would stop the CFPB from proceeding with the rulemaking process. Its supporters argue that the data-collection rules would be too burdensome for financial institutions.
“The result of these new requirements would not have been better information, but less credit for small businesses on Main Street,” Richard Hunt, president and CEO of the Consumer Bankers Association, said in the press release announcing the legislation.
The idea of repealing the rules drew a rebuke from Luz Urrutia, the CEO of a nonprofit small-business lender in California and a former member of the CFPB’s Consumer Advisory Board. She said that female and minority business owners who are either equally qualified or more qualified than other applicants are denied loans at higher rates.
“America cannot be a nation that purports to venerate small businesses, while at the same time ignoring the inequities they face accessing capital,” Urrutia said in an email.