House votes to axe 'woke' small-business lending rule, lining up Biden veto

The House of Representatives has voted to overturn an Obama-era regulation that requires banks to collect data on small business owners when they apply for loans. The move is a response to Republican lawmakers who argue that the rule is an intrusion on privacy. The House voted along party lines, with Republicans in favor of axing the rule and Democrats opposed. The measure is almost certain to face a veto from President Joe Biden, as it needs the approval of both houses of Congress and the President to become law. The regulation, known as the Small Business Lending Data Collection Rule, was implemented by the Consumer Financial Protection Bureau (CFPB) in 2017. It was intended to address concerns about access to credit for minority-owned and women-owned businesses. Under the rule, banks are required to collect information on the race, ethnicity, and gender of small business owners, as well as the number of employees and annual revenues of their businesses. This data is then used by regulators to monitor for discriminatory lending practices and to identify any potential gaps in access to credit. Proponents of the rule argue that it is necessary to ensure fair access to credit for all small business owners. They say that without this information, it would be difficult to identify and address disparities in lending practices. However, critics of the rule, mostly Republicans, argue that it is unnecessary and burdensome. They contend that it is an invasion of privacy and that it places an undue regulatory burden on small banks. "This rule is nothing more than a woke invasion of small businesses' privacy," said Representative Blaine Luetkemeyer, a Republican from Missouri and the sponsor of the measure to overturn the rule. Luetkemeyer and other critics of the rule argue that it is based on a flawed premise. They contend that there is no evidence to suggest that discrimination is a widespread problem in small business lending. In addition, they argue that the rule fails to take into account the potential unintended consequences it may have on small lenders. They argue that because the rule requires banks to collect a significant amount of data on small business owners, it is likely to discourage lenders from providing loans to small businesses. "This rule is an answer in search of a problem," said Representative Patrick McHenry, a Republican from North Carolina. Supporters of the rule, on the other hand, argue that it is necessary to ensure that all small businesses have access to credit. They contend that minority-owned and women-owned businesses have historically faced barriers in accessing credit, and that the rule is designed to address these disparities. "The data collection rule is an important tool in identifying barriers to credit access that small businesses face, especially for minority-owned and women-owned businesses," said Representative Maxine Waters, a Democrat from California and the chair of the House Financial Services Committee. Waters and other supporters of the rule argue that by collecting data on small business owners, regulators will be able to identify any discriminatory lending practices and take appropriate action to address them. The fate of the rule now rests with the Senate, where it is also expected to face opposition from Republicans. If the measure is approved by both houses of Congress, it will then go to President Biden for his signature. However, the President is expected to veto the measure. The White House has already issued a statement expressing its strong opposition to the repeal of the rule. In the statement, the White House argued that the rule is an important tool for promoting fair access to credit and addressing disparities in lending practices. It also argued that the rule does not impose an undue burden on small lenders, as critics of the rule contend. "The President strongly opposes the repeal of the Small Business Lending Data Collection Rule," the statement read. "The rule is intended to ensure equal access to credit for all small businesses and is an essential tool for combating discrimination in lending." The statement went on to say that the repeal of the rule would "undermine the administration's commitment to promoting equity and addressing systemic racism." In order for the measure to become law, it would need the support of two-thirds of both the House and the Senate to override the President's veto. Given the current partisan divide in Congress, it is unlikely that the measure will garner enough support to overcome a veto. As a result, the fate of the Small Business Lending Data Collection Rule is likely to remain uncertain in the coming months. For now, banks will continue to be required to collect data on small business owners when they apply for loans. However, it remains to be seen whether the rule will be enforced in the long term.