Senate votes to block CFPB small business lending rule, Biden threatens veto

By Real Estate News

With the U.S. House of Representatives effectively incapable of conducting lawmaking business until a new speaker is elected, the U.S. Senate is pressing forward with its own business, including the Wednesday vote to overturn the Consumer Financial Protection Bureau (CFPB)’s small business lending rule. This is according to reporting at Politico and Roll Call.

The rule, introduced in March, would require lenders to collect and report information about received small business credit applications including geographic and demographic data, lending decisions and credit pricing.

It aims to partially align small business lending standards with those of the mortgage industry, a recommendation made in 2017 by inaugural CFPB Director Richard Cordray.

But Republican Sen. John Kennedy, who sponsored a bill aimed at blocking the rule from going into effect, said that the regulation was too “intrusive” on small businesses.

The bill managed to garner support from Democratic Sens. Joe Manchin, Jon Tester and John Hickenlooper, as well as independent Sens. Kyrsten Sinema and Angus King, with a final vote tally of 53-44.

“The bank has to ask the small-business person if that small-business person is gay,” Kennedy said on the Senate floor, according to Politico. “What a private American does with another private, adult American in the privacy of their bedroom — we are free, so long as it doesn’t break any laws, to express our sexuality however we want to, and it’s none of the CFPB’s business.”

“Today, the Senate will vote on a Republican resolution to chip away at yet another example of the Biden administration’s runaway regulatory state,” said Sen. Mitch McConnell, the Senate Minority Leader, before voting. “Washington Democrats want to tie small-business loans to diversity quotas.”

Sen. Sherrod Brown, chairman of the Senate Banking Committee, defended the rule in his floor remarks.

“Small-business lending takes place in the dark,” Brown said. “We don’t have good data about how lenders are serving the small business in their communities. We don’t have good data about whom lenders might be leaving behind. The data we do have suggests too many small-business owners aren’t getting a fair shot at a loan for their businesses.”

The bill will still need to be adopted in the House, which likely cannot take place until the election of a new speaker or the empowerment of Republican Speaker Pro Tempore Rep. Patrick McHenry, to take up new legislative business.

However, the White House on Wednesday threatened to veto the bill if it is passed in the House and sent to the president’s desk. Congress has the option to override the veto, but unlike an initial passage a veto override requires a two-thirds majority in both chambers to be codified into law. That would require at least 66 senators and 290 House members.

The lending rule has faced a consistent stream of challenges from multiple parties since being introduced, including from the House and a Texas trade group and local bank, along with court challenges in other states.