President Joe Biden vetoed a joint resolution to repeal a controversial small business lending rule enforced by the Consumer Financial Protection Bureau (CFPB).
This rule, which has been a point of contention, mandates lenders to collect and report specific credit application data from small business owners, including personal demographics.
CFPB rule requires lenders to disclose loan applicant demographics
The rule, effective since August, requires lenders to report details such as the race, sexual orientation, and gender identity of small business loan applicants to the CFPB.
It also facilitates the creation of a database accessible to the public containing this information.
Republicans decry ‘woke’ lending rule; Biden defends for transparency
Republicans have criticized this move, labeling it an attempt to infuse “woke” elements into the lending process.
However, President Biden, in his veto issued on Dec. 19, staunchly defended the rule, emphasizing its role in enhancing transparency in small business lending.
Biden: GOP resolution harms small business, favors big banks
In his statement, President Biden argued that the Republican resolution would obstruct government oversight of predatory lending practices.
He pointed out that it could adversely affect the access of 33 million small businesses in the U.S. to capital and obstruct efforts to address capital access issues faced by minority- and women-owned businesses.
He accused Republicans of favoring large banks and corporations over small business needs, reiterating his administration’s commitment to supporting the growth and prosperity of small businesses.
Senator Kennedy’s opposition and NFIB’s concerns
Senator John Kennedy (R-La.), the leading proponent of the repeal, criticized the rule for its perceived intrusive nature, especially in terms of the demographic questions lenders are required to ask small business owners.
His stance highlights concerns about personal privacy rights. The National Federation of Independent Business (NFIB) has also voiced apprehension, stating that the rule burdens small banks and businesses.
The NFIB’s survey revealed that most of its members rely on small or regional financial institutions, raising concerns that the law could impact their access to credit.
Biden’s veto unlikely to be overturned due to slim majorities
An override of President Biden’s veto would necessitate two-thirds majority votes in both the House and Senate.
Given the slim majorities with which Senator Kennedy’s resolution passed in both chambers, the likelihood of an override appears remote.
This scenario underscores the political divisions and challenges in balancing regulatory oversight with the operational realities of small businesses and financial institutions.
CFPB rule debate underscores regulatory challenges for small businesses
The discussion surrounding this CFPB rule and the subsequent veto reflects the ongoing tension between regulatory intentions and practical implications, especially in small business operations and privacy concerns.
This issue remains a focal point in the broader discussion on how best to support and regulate small businesses, a critical sector in the U.S. economy.