President Joe Biden vetoed a congressional resolution Tuesday that aimed to overturn a Consumer Financial Protection Bureau rule requiring certain financial institutions to report data on small business loan applications.
The resolution would undermine the CFPB’s oversight of predatory lending in the small-business loan market, Biden argued.
“This Republican-led resolution would hinder the Government’s ability to conduct oversight of abusive and predatory lenders, make it harder for 33 million small businesses across the country to assess lending opportunities and access capital, and make it more difficult for lenders and community groups to address the most acute gaps in capital access for minority- and women-owned businesses,” Biden said in a statement Tuesday.
The rule, issued in March and applying to banks that issue 100 or more small-business loans per year, has drawn criticism over details — particularly, pertaining to race, gender and demographics — that it seeks to collect from small-business owners when they apply for loans.
Though proponents claim the information would help fight unlawful discrimination, detractors call the collection of it intrusive.
The Senate voted 53-44 to repeal the measure in October. The House of Representatives followed, this month, with a 221-202 vote. The resolution would have needed the president’s signature to take effect, but Biden had long been expected to veto it. There is likely not enough support in Congress to override the veto.
The veto irked several banking trade groups, which expressed their objection.
“We call on Congress to override President Biden’s veto to avoid degrading the ability of community banks to meet the needs of small businesses while requiring financial institutions to burden their customers with invasive and personal questions the CFPB would then publicly report,” Independent Community Bankers of America CEO Rebeca Romero Rainey said in a statement Wednesday.
The American Bankers Association, in a November letter to lawmakers, wrote that the enormity of the data points banks would need to collect — and the threshold for determining which lenders must report data — would put significant burdens on community banks.
“We are disappointed that POTUS chose to ignore the strong, bipartisan majority in Congress that voted to overturn the CFPB’s harmful small business lending reporting requirements. An override of his veto would be a vote for small businesses and the lenders that support them,” the ABA said Tuesday on X, formerly Twitter.
A Texas federal judge exempted ABA member banks in July from implementing the data collection rule until the Supreme Court makes a ruling on the constitutionality of the CFPB’s funding. The same judge expanded that injunction nationwide in October, asserting his earlier ruling — covering only certain banks — allowed for a double standard.
