The House on Friday voted 221-202 to nullify a Consumer Financial Protection Bureau rule requiring lenders to report demographic data on small business loan recipients.
The White House has threatened to veto the Congressional Review Act resolution that would block the regulation. Six House Democrats joined with Republicans to pass the rollback. In October, the Senate passed it in a 53-44 vote with backing from three Democrats plus Sens. Kyrsten Sinema (I-Ariz.) and Angus King (I-Maine).
The consumer bureau in March finalized the rule under Section 1071 of the Dodd-Frank law, requiring financial institutions to turn over information about the race, ethnicity and gender of small business loan recipients, in addition to information on lending decisions and the price of credit. The first data reports, for lenders above a certain threshold of transactions, are due next October.
Republicans and banks have pushed back on the rule, accusing CFPB Director Rohit Chopra of regulatory overreach and arguing that the rule is both invasive and onerous to comply with.
“Requiring lenders to provide this information infringes on small business owners’ right to privacy about their personal and business information when applying for credit,” House Small Business Chair Roger Williams (R-Texas) said on the House floor Friday.
The bureau and its Democratic supporters contend the rule will help ensure that lenders distribute loans equitably to underrepresented borrowers.
The 1071 rule “will provide small business owners, lenders, and the public with critical information about the $1.7 trillion small business financing market,” the White House said in October in a statement threatening to veto the bill. “If enacted, this resolution would harm all those that stand to benefit from this expanded transparency and accountability.”
The rule has also faced legal challenges. A federal court in Texas suspended enforcement of the rule in July for members of the American Bankers Association and the Texas Bankers Association. The groups had sued to block the rule until the Supreme Court resolves a case challenging the CFPB's funding structure. The high court, which heard arguments in that case in October, is expected to rule on the matter by June.