Senators Introduce Legislation to Shield Small Businesses from Overburdening Regulations

Strategic Insights -

U.S. Senators John Boozman (R-AR) and Katie Britt (R-AL) have introduced the Preventing Regulatory Overreach to Empower Communities to Thrive and Ensure Data privacy (PROTECTED) Act in response to the Biden administration's Consumer Financial Protection Bureau (CFPB) 1071 Small Business Lending Data Collection rule. This rule requires small business lenders to collect and report sensitive social data on small businesses seeking loans, which could pose significant compliance costs and impact access to capital for Main Street businesses.

Key Takeaways:

  • The PROTECTED Act aims to shield small financial institutions and Main Street businesses from the burdensome compliance costs associated with the CFPB rule.
  • The legislation seeks to limit the number of small businesses impacted and reduce the amount of data required to be collected and reported.
  • The bill would establish critical safeguards to prevent the CFPB from publishing sensitive consumer data and require the Bureau to conduct updated cost-benefit analyses prior to the rule's implementation.
  • The PROTECTED Act would give small lenders a three-year reprieve from implementing the rule, followed by a two-year grace period, to address concerns over excessive data collection and consumer privacy.
  • The Senator Britt noted that the CFPB under the last administration operated virtually unchecked and created a regulatory nightmare for small businesses.
  • The PROTECTED Act also aims to safeguard small businesses by limiting excessive data collection and protecting consumer privacy.

Statistics:

  • 1071 Small Business Lending Data Collection rule requires small business lenders to collect and report social data on small businesses seeking loans.
  • The CFPB rule could pose significant compliance costs and impact access to capital for Main Street businesses.
  • The PROTECTED Act would give small lenders a three-year reprieve from implementing the rule, followed by a two-year grace period.
  • The Senator Britt stated that the CFPB under the last administration operated virtually unchecked and created a regulatory nightmare for small businesses.

Sources:

  • United States Senator for Arkansas -- John Boozman
  • United States Senator for Alabama -- Katie Britt
  • Rep. French Hill (AR-01)
  • Dodd-Frank Act
  • Congressional Review Act