S.557 - 1071 Repeal to Protect Small Business Lending Act (119th Congress)
Summary
S.557, the "1071 Repeal to Protect Small Business Lending Act," aims to repeal Section 704B of the Equal Credit Opportunity Act, which was added by Section 1071 of the Dodd-Frank Act. This section mandates data collection and reporting requirements on financial institutions regarding small business loans. The bill argues that these requirements increase compliance costs for financial institutions, potentially reducing access to credit for small businesses, especially impacting smaller institutions like community banks and credit unions.
Expected Effects
If enacted, S.557 would eliminate the data collection and reporting requirements on small business loans mandated by the Dodd-Frank Act. This could lead to reduced regulatory burdens for financial institutions. It may also alter the landscape of small business lending data available for analysis and policymaking.
Potential Benefits
- Reduced compliance costs for financial institutions, potentially freeing up resources for lending.
- Increased access to credit for small businesses due to reduced regulatory barriers.
- Support for smaller financial institutions like community banks and credit unions, which are critical to small business lending.
- Streamlined lending processes, making it easier for small businesses to obtain loans.
- Potential for increased competition among lenders, leading to better loan terms for small businesses.
Most Benefited Areas:
Potential Disadvantages
- Reduced transparency in small business lending, making it harder to detect discriminatory lending practices.
- Potential for decreased oversight of lending practices, which could lead to increased risk for borrowers.
- Loss of valuable data on small business lending trends, hindering informed policymaking.
- Possible increase in predatory lending practices targeting vulnerable small businesses.
- Difficulty in assessing the effectiveness of programs designed to support small business lending.
Most Disadvantaged Areas:
Constitutional Alignment
The bill's focus on regulating commerce and credit falls under the purview of Congress as outlined in Article I, Section 8, Clause 3 of the Constitution (the Commerce Clause). The repeal of a prior act does not inherently violate any specific constitutional provision. However, the potential impact on equal opportunity in lending could raise concerns related to the 14th Amendment's Equal Protection Clause if the repeal leads to discriminatory practices.
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).