FIRST ON FOX: A group of House Republicans introduced legislation Wednesday that would prevent the federal government from forcing its "woke agenda" upon small banks.
The Making the CFPB Accountable to Small Business Act, authored by Rep. Scott Fitzgerald, R-Wis., would repeal a provision in the 2010 Dodd-Frank Act which requires small lenders to report various data points related to credit applications from small businesses owned by minorities and women. In September, the Consumer Financial Protection Bureau (CFPB) proposed a rule implementing the provision that it said would help the government learn "what barriers are holding [small businesses] back from further prosperity."
"I don't think there's been anything that has been rolled out in the last year and a half that you can't find at least some reference or a sentence or a bigger concept that's related to the woke agenda," Fitzgerald told FOX Business in an interview. "I think it's always to appease the far left. It's the only way for them to garner enough votes or support for something that otherwise would be dismissed as not needed."
"It's all related to what the White House is pushing," he continued.
Fitzgerald added that the Biden administration's proposed rule would be onerous for small lenders, especially amid the current poor economic conditions. He said small and local financial institutions have communicated to him that the rule is atop their list of worries moving forward.
"It's over-regulating financial institutions and that's why they're so concerned," he told FOX Business. "This rule would basically force community banks and credit unions to collect and report data a lot of people would consider somewhat sensitive."
Fitzgerald's bill was co-sponsored by Reps. Maria Salazar, R-Fla., Andrew Garbarino, R-N.Y., both members of the House Small Business Committee, and Michelle Fischbach, R-Minn., the ranking member of the Agriculture Subcommittee on Commodity Exchanges, Energy and Credit. Various groups representing local banks and credit unions — including the Credit Union National Association and the Independent Community Bankers of America — also endorsed the legislation.
"The small business lending rule is not a discretionary rulemaking," a CFPB spokesperson told FOX Business in a statement. "The Consumer Financial Protection Bureau is under a congressional mandate to implement Section 1071 of the Dodd-Frank Act. The CFPB’s progress in implementing Section 1071 is subject to court supervision and the CFPB is under a court order to finalize the rule by March 2023."
The spokesperson added that the CFPB hasn't yet implemented the rule, saying the agency was "carefully reviewing" all comments it received from stakeholders.
Several small banks submitted public comments, criticizing the CFPB's rule after it was published late last year. Their comments largely echoed Fitgerald's concerns.
"These lengthy proposed rules are a large regulatory burden. The [Federal Deposit Insurance Corporation] wonders why very few new banks are formed, this is a big part of it," ONB Bank, a small Minnesota-based bank, wrote in a November comment. "We are losing two banks every three days in the U.S. - every bank that closes, merges, etc. reduces the opportunity for individuals and businesses to obtain financing and rely more on the large banks, many of which have a proven track record of abandoning our communities."
"This continual addition of regulatory burden on community banks without corresponding reductions to offset will accelerate the pace of bank consolidation, which hurts consumers - the very people you are trying to protect," the bank continued.
Community banks "are being squeezed out of the market," ONB's comment added.
"Our concern is that the costs and resources required to comply with the reporting burden of this proposed rule will result in fewer such smaller loans being made because of diverted resources to compliance or less funds for borrowing being available because of balance sheet decisions that would shift available lending dollars into areas with less unnecessary reporting and regulatory requirements," Mountain America Credit Union, a small Utah financial institution, separately wrote in December.