The House of Representatives voted, by a 221-202 margin, to repeal a Consumer Financial Protection Bureau regulation mandating small-business lenders compile borrower demographic information.
The legislation will proceed to President Joe Biden, who is expected to veto it, according to Bloomberg Law.
The Republican-majority House voiced its disapproval Friday. The Senate voted 53-44 to repeal the measure in October.
Six Democrats — Reps. Ed Case of Hawaii, Henry Cuellar of Texas, Jared Golden of Maine, Kathy Manning of North Carolina, Mary Peltola of Alaska and Marie Gluesenkamp Perez of Washington — joined Republicans in voting against the measure, according to Bloomberg Law. Rep. George Santos, R-NY, voted present only minutes before the House voted to expel him, the publication added.
"The CFPB's rule is overly broad," Rep. Roger Williams, R-Texas, House Small Business Committee chairman, said in opening remarks on the House floor Friday, according to American Banker. "It will require lenders to collect massive amounts of data whenever a small-business owner applies for credit. Most of the information is unnecessary to make a fair, equitable, safe and sound loan."
The measure, announced in March, has drawn criticism over the specific pieces of information it seeks to collect from small-business owners when they apply for loans. Proponents have said the details, which include geographic and demographic information on the borrowers and the price of credit, would help fight unlawful discrimination. But detractors have denounced the data collection as intrusive.
"This rule does not go after big banks — it will have the biggest impact on the small community financial institutions already operating under the thinnest of margins," Williams said.
Judge Randy Crane of the U.S. District Court for the Southern District of Texas put the CFPB small-business data collection rule on hold nationwide in October. He had exempted members of the Texas Bankers Association, American Bankers Association and McAllen, Texas-based Rio Bank in July from complying with the rule.
Rio Bank and the Texas Bankers Association filed a complaint in court in April against the CFPB, alleging the rule will hinder lending to nonwhite- and women-owned businesses.
"This small-business loan census will give the public key data on this market to ensure that banks and nonbanks are serving small businesses fairly," CFPB Director Rohit Chopra said in a statement in March.
Rob Nichols, CEO of the American Bankers Association, praised the disapproval of the CFPB's Section 1071 final rule, saying it would "actually discourage bank lending to small businesses given the cost to collect this data."
Nichols emphasized that America's banks firmly support the objective of Section 1071 and the implementation of fair lending laws across the U.S. But he insisted that publication of the data might put the privacy of small businesses at risk.
"Given the similar bipartisan vote in the Senate, President Biden should recognize that Congress has spoken and rejects the CFPB's flawed rule given the harm it would cause small businesses across the country and the banks that support them,” he said. "Now is the time for the CFPB to work with all stakeholders to revise this rule in a way that actually incentivizes bank lending to all small businesses.”
Jesse Van Tol, CEO of the National Community Reinvestment Coalition, meanwhile, said, "Today's vote for a move President Biden will veto was a pointless show put on for bank industry donors who still don't know how to say yes to a good idea."
“The public, the banking industry and the economy will all benefit from the implementation of a Section 1071 final rule which gave banks some of what they asked for,” Van Tol told American Banker.
