Mr. KENNEDY. Mr. President, the Consumer Financial Protection Bureau—we call it the CFPB—has struck again. It has made another bad decision—this by an Agency that has become famous for bad decisions. Here is what is going on.
You will remember the Dodd-Frank Act, of course, which this Congress passed after the financial meltdown in 2007, 2008, and 2009. There was a section in the Dodd-Frank Act called section 1071—fairly innocuous. Congress directed certain information to be collected about small business loans.
We were curious about small business lending in America, so we directed, in this section 1071, certain covered financial institutions—I call them small banks because most business loans to small business people come from small banks. We directed small banks to start collecting information about their loans to small business people because we wanted to know and see if we could do something to make their services more efficient.
We, the Congress, asked that 13 pieces of information be collected. It is the sort of stuff that you would imagine, very routine stuff, like ‘‘What was the date of the loan, the small business loan? How much was the loan?’’ that sort of thing.
Well, the CFPB has taken our work and totally perverted it. The CFPB has promulgated a rule that totally perverts our intention in section 1071 of the Dodd-Frank Act. First, we intended for only small businesses to be covered in providing this information.
Now, if you look at the definition of a ‘‘small business,’’ most people use the definition that has been put out by the National Federation of Independent Business. That is the NFIB. It says that a small business is a business that has 10 or fewer people and sales of about half a million dollars a year—not according to the CFPB. They want to cast the net as far and as wide as they can.
Their definition of a ‘‘small business’’ will almost double that—more than double that. They say a small business is a company with $5 million in revenue or less from the previous fiscal year, not $500,000 but $5 million.
So this is going to throw the net of government much, much wider than Congress ever intended. But, secondly, the most egregious thing the CFPB has done is they took our 13 pieces of information that we asked for, by Congress, and they expanded it to 81.
All of a sudden, they want a book. Here are some examples of what the CFPB is going to require small banks to ask of small business women and small business men when they come to the bank and ask for a loan.
The bank has to ask the small business person how long it has been in business. That is fair. The bank has to ask the small business woman or small business man about its annual revenue. That is fair.
But then it gets a little intrusive. It gets a lot more intrusive. The bank has to ask the small business woman or small business man what their race is. The bank has to ask the small business person about their ethnic background. The small bank has to ask the small business person if he is a male. The bank has to ask the small business person if she is a female.
It should be obvious to many, but those questions have to be asked. The bank has to ask the small business person if that person is a lesbian.
The bank has to ask the small business person if that person is gay. The bank has to ask that small business person if that small business person is bisexual. The small bank has to ask its customer, that small business person, if that small business person is transgender.
The bank, according to the CFPB, has to ask that small business person who is applying for a loan, who just came in for a loan for the business, if that person is queer. The small bank has to ask that small business person if the small business person is intersex.
Not only does the bank have to ask those questions, those private questions, of the person from the small business applying for the loan, the person applying for the loan on behalf of the small business has to bring in every one of its owners who owns 25 percent or more, and the bank has got to start over with those people. Are you a male? Are you a female? What is your race? Tell me about your ethnic background. Are you a lesbian? Are you gay? Are you bisexual? Are you transgender or are you queer or are you intersex? Give me a break.
Then all of this information that is collected, this private information, has to be sent to the CFPB, and they are going to put it on their website. Are you gay? Are you lesbian? What race are you? They are going to put it on their website. Now, the CFPB says: Well, it is going to be institutional-level data, just topline data fields. Bull.
You will be able to take this data, particularly if you are a small bank in a rural area, and be able to—the snoops will be able to go on that public website and identify small business people in their community—how much money they are borrowing, how they answered the question about whether they were gay, how they answered the question about whether they were intersex.
This is incredibly private information. And why? Why would the CFPB need this information? Well, the truth is, they don’t, but I will tell you why.
The CFPB is setting these small business people—but also these small banks—up for lawsuits. That is exactly what they are doing. What happens if a small business person goes into the bank and the small banker says: Listen, I hate to have to ask you this, but the CFPB says I have to ask you. Are you gay? As if that is anybody’s business. The small business person says: That is none of your business, and I am not going to answer that question. I am here for a loan, not to talk about my private life. What I do in the privacy of my bedroom with a consenting adult is my opinion, Mr. Banker.
The small banker says: You are right. I am sorry. I had to ask. They made me. If the small business person won’t answer the question, the small banker can get in trouble with the CFPB. What has the world come to?
And the CFPB doesn’t care about the cost. Do you know what this is going to cost to implement every year? Four hundred million dollars. Why? And that doesn’t even include the cost of actually setting up this program. That will be hundreds of millions of dollars more.
It is not like the CFPB is exactly a wizard when it comes to data security. I mean, yes, it is going to be on their public website, but in terms of the granular information, the CFPB says: Oh, don’t worry; we will protect it. Right.
Like they protected it a few months ago?
The personally identifiable information of 256,000 consumers, which is being held by the CFPB, was breached. And do you know what the CFPB did? They didn’t tell anybody for 2 months. They acted like a rock, only dumber. We are not talking about wizards here, wizards of financial data privacy and security.
You know, I hear it all the time, and the Presiding Officer probably hears it back in his State, perhaps. But people tell me all the time: Kennedy, what is wrong with Washington, DC? Why is common sense illegal there? This rule. This rule. What has the world come to?
So my Congressional Review Act request is to have the Senate tell the CFPB that it is none of their business—none of their business—what a private American does with another private adult American in the privacy of their bedroom. We are free, so long as it doesn’t break any laws, to express our sexuality however we want to, and it is none of the CFPB’s business. With that, I ask my Senate colleagues to overturn this rule.
Mr. BROWN. We know our middle class relies on strong, small businesses. Small business ownership is the second largest source of personal wealth in this country, only behind owning a home. Small businesses make up more than 40 percent of our economy—no better example than that of the Presiding Officer from Colorado and the work that he did as he had the phenomenal success he did starting small businesses.
We know, to build strong businesses, entrepreneurs need credit.
A loan lets you turn an idea into a business or invest in your company to hire more workers. That is why small business credit is so essential to our economy and to our middle class.
Today, small business lending takes place in the dark. We don’t have good data about how lenders are serving the small businesses in their communities. We don’t have good data about whom lenders might be leaving behind.
Without transparency, it is all too easy for entrepreneurs in Ohio and around the country to lose out. The data we do have suggests too many small business owners aren’t getting a fair shot at a loan for their businesses.
Take rural small businesses. We know that rural communities have seen bank branch close after bank branch close for years, drying up access to credit for lots of small businesses in rural Ohio.
We need the data to understand how to reach these business owners and how to grow small town economies.
Or take small businesses owned by women or by people of color. The data we do have suggests they are more likely to be denied loans and they are more likely to be charged higher interest rates.
You don’t need reports and studies to know that most Ohioans don’t get a fair shake from big banks and the financial system. You do need accurate information to fight back.
That is why, in 2010, Congress required the Consumer Financial Protection Bureau to get that information; and this spring, the CFPB issued a rule to finally implement the law and to bring transparency to the small business lending market.
We are talking about basic data on the borrowers’ demographics, loan pricing, application approvals, and other critical information—just like we do with mortgages.
It is not that complicated and not that difficult and not that expensive. With this data, we will be able to see gaps in the small business lending market, allowing programs to expand access to credit for small businesses, especially like small businesses in rural areas.
More data means more accountability, ensuring that lenders reach minority communities and helping to root out discrimination. We have seen this model work before.
After we began publishing data some years ago about home mortgages, more Americans of all races and backgrounds were able to achieve the dream of homeownership. This still protects people’s privacy.
Borrowers are not required to submit information if they don’t want to.
Of course, big banks and their lobbyists are putting up a fight. They always do.
Any time there is a rule that might change their behavior, they come up with the same song and dance: It is too expensive. We have to hire new people.
Actually, it helps them serve the community better.
I am not going to help Wall Street avoid accountability. There has been too much of that.
When I took over chairmanship of this committee, it was called the Senate Banking Committee, and it was a committee all about Wall Street.
We changed this.
The colloquial name of this committee is the Senate Housing and Banking Committee.
Our charge is to build more homes, to make them more affordable, to help with transit systems in places like Atlanta and Denver and Cleveland, and to look out, especially, to help small banks and communities.
That is why we are going to hold Wall Street accountable. I want to see more rural small businesses get loans and grow and be successful.
We are not going to let the banking lobby stand in the way, as it all too often has. I hope my colleagues will stand up for small businesses, will stand up for entrepreneurs, and will vote no on this resolution.