The Senate voted 53-44 Wednesday to overturn a Consumer Financial Protection Bureau rule requiring personal information on small-business borrowers, including race and sex, from the financial institutions that lend to them.
Senate Minority Leader Mitch McConnell, R-Ky., touted the resolution introduced by Sen. John Kennedy, R-La., under the Congressional Review Act as striking a blow to President Joe Biden’s regulators. Resolutions under the CRA require only a simple majority in the Senate.
“Today, the Senate will vote on a Republican resolution to chip away at yet another example of the Biden administration’s runaway regulatory state,” McConnell said in floor remarks ahead of the vote. “Washington Democrats want to tie small-business loans to diversity quotas.”
House Small Business Chairman Roger Williams, R-Texas, has introduced a companion resolution in the House. The House Financial Services Committee advanced the resolution in July, but it hasn’t been taken up on the floor.
The CFPB rule finalized in April would require financial institutions to report information about minority- and women-owned firms, and small businesses applying for loans, in order to aid enforcement of fair lending rules. Congress mandated the rule in its 2010 financial regulatory overhaul law.
Democratic Sens. Joe Manchin III of West Virginia, John Hickenlooper of Colorado and Jon Tester of Montana joined Republicans to vote to overturn the rule. Independent Sens. Kyrsten Sinema of Arizona and Angus King of Maine, who caucus with Democrats, also voted to overturn it. Manchin, Tester, Sinema and King are up for reelection in 2024, although not all have said whether they are seeking another term.
Senate Banking Chairman Sherrod Brown, D-Ohio, took the floor ahead of the vote to defend the CFPB rule, saying it would make the small-business lending market more transparent and level the playing field for entrepreneurs the financial industry has traditionally overlooked.
“Small-business lending takes place in the dark. 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,” Brown said. “The data we do have suggests too many small-business owners aren’t getting a fair shot at a loan for their businesses.”
The resolution is likely to find strong support in the Republican-controlled House, but without a speaker, it’s unclear when the chamber could take it up. If Biden vetoes the resolution, it would require a two-thirds majority in each chamber to override it.