Legislation led by U.S. Rep. French Hill (R-AR) to protect small banks and lenders from specific reporting requirements on May 16 passed the U.S. House Financial Services Committee as part of a larger bill offered by U.S. Rep. Young Kim (R-CA) to support American consumers and cut federal red tape.
“I’ll keep doing my part to get these bills across the finish line to make life affordable and keep the American dream alive for future generations,” said Rep. Kim following the committee’ 27-22 vote to pass the larger bill, her Clarity in Lending Act, H.R. 8338, which includes Rep. Hill’s Small Lenders Exempt from New Data and Excessive Reporting Act, or the Small LENDER Act, H.R. 1806.
“I applaud the Small LENDER Act’s passage through the House Financial Services Committee and am pleased that my bill is one step closer to reaching the House floor,” Rep. Hill said. “With small lenders often driving investment in their local communities, it is crucial that small businesses have access to the capital they need to prosper.”
Sponsored by Rep. Hill in March 2023, H.R. 1806 would exempt certain financial institutions and transactions from the Consumer Financial Protection Bureau (CFPB) reporting requirements with respect to data about small business credit applications.
Under the bill, the requirements apply only to financial institutions that originate at least 500 credit transactions to small businesses in each of the preceding two years. The bill would further define small businesses as those with annual revenue of $1 million or less, according to the congressional record bill summary.
Currently, the CFPB has proposed a rule that the requirements apply only to financial institutions that originate at least 25 annual credit transactions to small businesses in each of the preceding two years, the summary says, noting that the rule further defines small businesses as those with annual revenue of $5 million or less.
“The CFPB’s 1071 rule hurts small businesses by making credit more expensive and disproportionately impacts smaller companies,” said the congressman. “My bill makes necessary changes to exempt community banks and lenders from having to comply with the CFPB’s harmful small business data collection regulation because of President Biden’s veto to repeal Section 1071 of Dodd-Frank.”
The larger H.R. 8338, which Rep. Kim sponsored on May 10 with lead cosponsor U.S. Rep. Mike Flood (R-NE), would regulate small-dollar, short-term credit products, protect the privacy of lenders, and improve the unfair, deceptive, or abusive acts or practices authority of the CFPB, according to the bill’s text.
If enacted, H.R. 8338 also would require the CFPB to establish a process to safeguard small business data, among other provisions, the text says.
“Small business owners and taxpayers cannot afford more out-of-touch policies that put the American dream out of reach,” Rep. Kim said. “I thank my House Financial Services Committee colleagues for supporting my common-sense bills to cut through red tape and expand access to capital.”
The measure now heads to the full House for consideration.