Brown Calls on Colleagues to Support Transparency in Small Business Lending
WASHINGTON, D.C. – Today, U.S. Senator Sherrod Brown (D-OH), Chairman of the Senate Committee on Banking, Housing, and Urban Affairs, took to the Senate floor ahead of a Congressional Review Act (CRA) vote to overturn the Consumer Financial Protection Bureau’s rule on small business lending pursuant to Section 1071 of the Dodd-Frank Act. The rule is designed to promote access to credit and combat discrimination in small business lending by making small business lending data more transparent.
Sen. Brown’s remarks, as prepared for delivery, follow:
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.
To build strong small businesses, entrepreneurs need credit. A loan lets you turn an idea into a business, or invest in your company to hire more workers.
That’s why small business credit is so essential to our economy and to our middle class.
But 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.
And we don’t have good data about who lenders might be leaving behind.
Without transparency, it’s all too easy for entrepreneurs in Ohio to lose out.
The data we do have suggest too many small business owners aren’t getting a fair shot at a loan for their business.
Take rural small businesses. We know that rural communities have seen bank branch closures for years, drying up access to credit for small businesses. We need the data to understand how to reach these business owners, and grow small town economies.
Or take small business owned by women or people of color. The data we do have suggest they’re more likely to be denied loans and 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. But you do need accurate information to fight back.
That’s why, in 2010, Congress required the CFPB to get that information, and this spring, the CFPB issued a rule to finally implement the law and bring transparency to the small business lending market.
We’re talking about basic data on the borrowers’ demographics, loan pricing, application approvals, and other critical information – just like we do with mortgages.
With this data, we’ll be able to see gaps in the small business lending market—allowing programs to expand access to credit for small businesses, like small businesses in rural areas.
And more data means more accountability—ensuring that lenders reach minority communities and helping to root out discrimination.
We’ve seen this model work before.
After we began publishing data about home mortgages, more Americans of all races and backgrounds were able to achieve the dream of home ownership.
This still protects people’s privacy – borrowers aren’t required to submit information if they don’t want to.
Of course, the big banks and their lobbyists are putting up a fight. They always do.
But I’m not going to help Wall Street avoid accountability.
I want to see more Ohio small businesses get loans and grow and be successful, and we are not going to let the banking lobby stand in the way.
I hope my colleagues will stand up for small businesses, stand up for entrepreneurs, and vote against this resolution.
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