The House voted on Friday to cancel an administration rule requiring banks to collect data on small business owners when they seek a loan, a rule that Republican critics contend is a "woke" invasion of privacy.
The resolution passed in a 221-202 vote. Six Democrats joined Republicans in greenlighting the rollback. President Joe Biden has said he would veto the measure, which already cleared the Democratic-controlled Senate in a bipartisan vote.
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The legislation would stop the Consumer Financial Protection Bureau plan to implementing a section of the Dodd-Frank Act. The rule in question requires covered financial institutions to collect and report certain personal information to the CFPB on small businesses that apply for credit, including those that are owned by women or minorities. Republicans have blasted the measure as overly onerous and intrusive and have branded it a “woke” rule.
Sen. John Kennedy (R-LA) led the effort to dial back the CFPB’s implementation of the rule. He used the Congressional Review Act to cancel it, which allows Congress to vote down administrative rules through an expedited process.
Republicans, and some centrist Democrats, have argued that the CFPB’s push for more disclosures about small-business owners — some of which would be made public — would represent a burden for small businesses.
Among the information the CFPB wants to collect are data on the race, ethnicity, and gender of the small-business owner and whether the business is owned by minorities, women, or gay or transgender people.
The White House has vowed that Biden will veto the dial-back, arguing that the rule gives small-business owners, lenders, and the public “critical information” about the massive small-business financing market.
“This resolution would hamper the efforts to promote transparency and accountability in small business lending and create hurdles for mission-driven lenders and community organizations striving to close the most acute gaps in capital access for minority- and women-owned businesses,” the White House said.
The CFPB rule in question applies to financial institutions that provided 100 or more small-business loans in each of the two preceding calendar years. In the context of the rule, a small business is defined as a company with $5 million or less in revenue.
During a hearing earlier this year with CFPB Director Rohit Chopra, Kennedy questioned the director over potential privacy concerns with its implementation.
“Why do you want to know what a small-business woman — let's say in a town of 20,000 people, going to her local bank [to] borrow money — why do you want to know what her sexual preference is? What business is that of yours?” Kennedy asked.
“What business is that of yours, what a small-business woman does in her bedroom?” he added.
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Republicans have previously used their CRA authority to push back on the Biden administration’s rulemaking, which has resulted in presidential vetoes.
Earlier this year, Republicans and a few Democrats passed a measure that would have canceled a Labor Department rule allowing retirement plan managers to weigh environmental and social issues when making investments. That resulted in the first veto of Biden’s presidency.