On Monday, Georgia Attorney General Chris Carr sent a letter to the Biden administration’s Consumer Financial Protection Bureau (CFPB) urging it to rescind its final rule requiring financial institutions to collect and report data regarding applications for credit for small businesses, arguing that the rule is unnecessary, burdensome and expensive.
“This latest rule from the Consumer Financial Protection Bureau has absolutely nothing to do with the process of evaluating which applicants are the strongest and most deserving of credit, and hardworking Georgians will pay the price,” said Carr. “At a time when access to capital is already difficult, this burdensome action will handcuff lenders and paralyze those segments of the economy reliant upon community banks to stay afloat. Rather than saddling small businesses with burdensome regulations, the Biden administration must immediately rescind this rule and allow states to continue to address lending issues as they occur.”
The rule requires that financial institutions collect and report data as to whether an applicant is a “Minority-Owned, Women-Owned, and/or LGBTQI+-Owned” business. Financial institutions are additionally required to prompt business owners to disclose their “ethnicity, race, and sex,” which the lender must then report to the CFPB.
Carr points out that states already have consumer protection and anti-discrimination laws, and that federal fair lending laws already prohibit lenders from discriminating on the basis of race and sex.
Carr writes, “This rule purports to ensure our financial institutions follow the laws that prevent discriminatory practices, but it does nothing to accomplish that aim. Instead, this collection of data redundantly saddles our community banks with additional compliance requirements. The constraints involved will cost small businesses precious resources – people, time, and money – resulting in business closures and job losses.”
