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Opening Statements

Meuser: “The End of Relationship Banking? Examining the CFPB’s ‘Small Business Lending Data Collection’ Rule”

Subcommittee Chairman Dan Meuser's Opening Statement

WASHINGTON, D.C. – Today, the House Committee on Small Business Subcommittee on Economic Growth, Tax, and Capital Access is holding a full hearing titled “The End of Relationship Banking? Examining the CFPB’s ‘Small Business Lending Data Collection’ Rule.”

Subcommittee Chairman Dan Meuser’s opening statement as prepared for delivery:

Good morning, and welcome to today’s Subcommittee hearing examining the Biden Administration’s continued regulatory overreach and its harmful impact on America’s small business economy.

First, I want to thank our witnesses for joining us today. We appreciate you taking the time to join us today.

Today’s hearing addresses a vital part of our country’s economy – small community lending institutions and the role they play in assisting our small businesses. As we meet here today, small financial institutions across the country are actively engaged in lending to Main Street America and our nation’s entrepreneurs who are in the process of starting their own businesses.

As our witnesses will discuss with the Subcommittee, the relationships between local lenders and the businesses in their communities take years to build and refine. These community lenders are also the ones best suited to determine the structure of the loans that provide to their customers – a personal touch that’s impossible for a large national institution to replicate.

Unfortunately, President Biden’s Consumer Financial Protection Bureau is poised to throw another wrench into this vital aspect of our economy. The CFPB is proposing to implement a new rule, the Small Business Lending Data Collection Rule, that will impose burdensome new reporting requirements that would harm small business lending. This rule will alter the behavior of small financial institutions and make them hesitant to continue lending to small businesses based on their long-established relationships with Main Street America.

This rule was born out of an obscure provision in Dodd-Frank almost 13 years ago. Most members of Congress were too busy debating too-big-too fail to even realize it was in there.

Making matters worse, this rule will add an even larger regulatory cost burden to these small financial institutions that are already struggling to keep up with the Biden Administration’s costly regulatory agenda. According to the SBA’s Office of Advocacy this rule, “may be unnecessarily burdensome to small entities, may impact the cost of credit for small businesses and may lead to a decrease in lending to small, minority-and women-owned businesses.” The Office of Advocacy estimates that the rule will have an initial $126 million impact on small financial institutions, and then going forward, an annual impact of $153 million. Unlike mega-banks that can absorb such costs, these will crush smaller institutions that don’t have the budget to absorb such new regulatory burdens. The Office of Advocacy also expressed concern that this rule failed to properly consider alternative less burdensome alternatives to the rule. These alternatives should have included exempting the smallest lenders but were never seriously considered.

The rule also creates racial profiling issues, privacy concerns, an unrealistic implementation window, and mandates excessive data collection of small business owners. In the digital age we live in, such personal information in the hands of so many different entities should give all of us, especially the CFPB, pause on such requirements.

At a time when Main Street America is dealing with unprecedented levels of inflation, interest rates that are being raised at the fastest pace since the 1980’s, supply chain disruptions, and a prolonged labor shortage, adding more burdens to our country’s job creators is the last thing the CFPB should be doing, but that is exactly what the bureau and the Biden Administration seem determined to do. Our small businesses and local community lenders deserve so much better.

With that I will yield to our distinguished Ranking Member from Ohio, Mr. Landsman.