On December 19, President Joe Biden vetoed a resolution that would have repealed the Consumer Financial Protection Bureau’s (CFPB) small-business lending rule.
The CFPB’s rule requires financial institutions to gather and report credit application data for small businesses to the bureau. The Republican-controlled House of Representatives approved the resolution to repeal the rule earlier this month after the U.S. Senate had done so in October.
In a statement by the White House, Biden said that repealing the rule would “harm all those that stand to benefit from expanded transparency and accountability.” The President accused Republicans of “siding with big banks and corporations over the needs of small business owners” and hampering efforts to promote transparency and accountability in small business lending.
The final rule for data collection on loans to small businesses was unveiled last March by the top U.S. government agency for consumer financial safety. The measure’s supporters claimed it would aid in the fight against discrimination and encourage investment.
The rule’s legal foundation dates back to the Dodd-Frank Wall Street Reform Act of 2010, enacted after the global financial crisis, which established the CFPB. Moreover, the rule applies to financial institutions that have originated a minimum of 100 small business loans in each of the two preceding calendar years. A small business has $5 million or less in revenue from the previous fiscal year.
However, there are concerns about the CFPB collecting and storing applicants’ personal information. The agency recently experienced a data breach that included the personally identifiable information of 256,000 consumers. They failed to inform them properly for two months, raising concerns about the safety and security of the collected data.