The next content is sponsored by Pinpoint Policy Institute.
As evidenced by the avalanche of about $ 2 billion or the bureaucracy unleashed by the Biden administration on the economy of the United States, never doubt the ability of the imagination of bureaucrats. The Biden Administration Financial Protection Office (CFPB) was criticized for its tendency to invent new and expensive ways to “protect” consumers. A remnant of the regulatory fervor of the Biden administration is a surprising example.
Under a provision of the Dodd-Frank Law known as section 1071, the CFPB issued a rule that forces banks, credit cooperatives and lenders or all sizes to collect and inform an exhaustive data treasure, 81 Sepication, LAN Business LAN. That includes not only the breed and sex, but also the LGBTQ state, the prices terms and the subscription details that the lenders cannot collect today.
OSTENIBERTAD The law is a step forward for the “fair loans”, in reality, it is an exercise of bureaucratic extralimitation records, driven by the same diversity, equity and idology of inclusion (DEI) that deformed the formulation of policies throughout the Biden administration. The rule is prepared to damage very small companies that claims to protect, in part of minority companies and owned by women who need access to affordable loan.
Section 1071 or Dodd-Frank authorized the CFPB to collect a narrow set O Commercial loan data, only 13 fields, mainly related to the demography of the applicants and the basic information of the application. But instead of following that list, CFPB bureaucrats took a mile of the inch of Congress. They claimed “discretionary authority” to demand detailed price data, stimulation characteristics not related to discrimination and even questions about the LGBTQ identity of the owners, which are not mentioned in the statute. This is only one of the reasons why the lenders sued the CFPB, preventing the rule from entering into force, for now.
Small community banks, the most active in the same communities as the law and rules serve nominally, will be more affected. The small business administration office said both in the comments to the CFPB, explicitly pointing out that “… can lead to a decrease in loans to small, minority and women companies.” Almost a third of credit cooperatives declared that they can leave the loan market of small businesses if this rule arose in force. Researchers from the Texas Technological University warned that the rule could cost loans based on the relationship, which is an essential element of small businesses.
As with so many regulations of the Biden era, the costs were underestimated and the benefits were exceeded. To reach its cost, the CFPB Re in a 2020 survey (pre-final rule, with only 13 data fields) and stimulated estimates of the mortgage market, which operates under totally different rules. And despite the warnings of other supervision bodies, such as the SBA Defense Office and the State Banks Supervisors Conference, the CFPB launched and advanced.
Even if the CFPB were correct in the law and costs (they were not), the data collected still have a limited value, they perhaps wait for the non -chosen bureaucrats who wish more and more in private institutions.
What is the point then? It is not really about enforcing fair loans. It is about creating a massive data warehouse to facilitate public shame and political pressure campaigns, a compliance score of Dei disguised as regulatory supervision.
And we have seen this play book before. Duration of the administration of Obama, the Department of Justice (DOJ) and Federal Deposit Insurance Corporation (Fdic) used the strangulation operation to silently press banks to reduce ties with the industries that do not like: weapons, payment day loans, whatever. This time, the CFPB is building a new strangulation point under the “Equity” flag.
This rule is the financial regulatory equivalent of ESG mandates in the Bag and Securities Commission (SEC), an ideological crusade that is legally doubtful, economical harmful and completely unnecessary. He already faces legal challenges, and although the reforms of the current administration to CFPB can prevail, Congress can end the law at this time. Legislators could apply to assignments cyclists.
More substantially, the representative Roger Williams (R-TX), president of the Committee of Small Committees of the Chamber, presented Legisletin in February to repeal section 1071. The measure was reported outside the committee in April and has a complementary bill in the Senate, sponsored by Senator John Kennedy (R-La.). When repeating 1071, Congress can end the CPFBS authority to carry out its root and branch of the fishing expedition.
Equity cannot mean punishing lenders to the presentation or assignment of Microgestion credit of Washington. And certainly it should not mean getting small banks out of the market as long as it helps the communities unattended.
This is not fair loans. It is a central planning with a sticker slapped in the front.