In a recent turn of events, the U.S. Senate passed a joint resolution of disapproval (S.J. Res. 32) under the Congressional Review Act, seeking to invalidate the Consumer Financial Protection Bureau’s (CFPB) small business lending rule.JD Supra reports the resolution comes as a response to the CFPB rule which mandates financial institutions to collate and report application data for small business credits to the CFPB.
The CFPB’s rule has, prior to this, drawn opposition from a number of politicians and has prompted lawsuits from financial institutions that would be subject to the rule in the U.S. District. The main contention lies in the perceived burden the rule places on financial institutions, coupled with concerns over data privacy.
This Congressional Review Act (CRA) resolution if signed into law, can effectively nullify the CFPB rule. The CRA permits Congress to review and overrule newly implemented federal regulations within a certain timeframe and with a simple majority vote. It marks another significant instance of the Senate invoking the CRA to counter regulatory initiatives.
While this Senate action undoubtedly reflects the delicate balancing act between regulatory measures and business operations, it also poses pertinent questions for legal professionals in corporate spaces. Firstly, it underscores the need for diligent monitoring of regulatory landscapes and prompt responses to potential changes. Secondly, it exemplifies the sheer importance of forecasting regulatory alterations to mitigate any negative impact on business operations.
As the situation unfolds, the corporate legal world should stay attentive to any developments regarding S.J. Res. 32 and its implications for both financial institutions and small businesses.