H.R.941 - Small Lenders Exempt from New Data and Excessive Reporting Act; Small LENDER Act (119th Congress)
Summary
H.R. 941, the Small LENDER Act, seeks to amend the Equal Credit Opportunity Act (ECOA) by providing a compliance period and safe harbor for financial institutions regarding small business lending data collection rules. The bill introduces a 3-year compliance period followed by a 2-year safe harbor from penalties for non-compliance with the Bureau's covered rule. It also redefines 'financial institution' and 'small business' for the purposes of these regulations.
Expected Effects
The bill aims to ease the regulatory burden on smaller financial institutions concerning data collection related to small business lending. This could lead to increased lending to small businesses by reducing the risk and cost of compliance for lenders. The redefinition of 'small business' to include those with gross annual revenues of $1,000,000 or less may also broaden the scope of businesses considered 'small' under the ECOA.
Potential Benefits
- Reduced regulatory burden for small financial institutions.
- Potential increase in lending to small businesses due to reduced compliance costs.
- Provides a grace period for financial institutions to adapt to new regulations.
- Clarifies the definition of 'financial institution' and 'small business'.
- May encourage more financial institutions to serve small businesses.
Most Benefited Areas:
Potential Disadvantages
- May weaken oversight of lending practices to small businesses.
- Potential for reduced data collection, hindering analysis of lending patterns and potential discrimination.
- The safe harbor provision could lead to inconsistent compliance with ECOA.
- May disproportionately benefit smaller lenders at the expense of larger institutions that already comply.
- Could create loopholes that allow some lenders to avoid scrutiny.
Constitutional Alignment
The bill appears to align with Congress's power to regulate commerce under Article I, Section 8 of the Constitution, specifically relating to financial institutions and lending practices. The Equal Credit Opportunity Act, which this bill amends, is intended to prevent discrimination in lending. This amendment seeks to provide a more measured approach to implementing regulations related to that goal. However, the impact on equal opportunity needs to be carefully considered to ensure it doesn't undermine the original intent of the ECOA.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).