One Big, Beautiful Bill Could Include Roger Williams Bill to Help Small Business 

On February 4^th, Congressman Roger Williams (R-TX) introduced H.R 976, a bill that would expand small business lending and slash burdensome regulatory requirements by repealing section 1071 of the Dodd-Frank Law.  

More recently, the Senate Banking Committee published their version of the reconciliation bill that includes a section delaying the implementation of section 1071 until 2034, saving small business lenders millions in regulatory fees, and time spent filling duplicative reporting measures. This section of the reconciliation bill represents a a temporary measure that can be taken under reconciliation until permanent repeal is passed.  

Existing regulations impede lending by levying unwarranted costs onto banks through compliance and reporting requirements. Rep. Williams’ bill seeks to eliminate Section 1071’s requirements that financial institutions collect extensive information on small business lending. 

The information collected from business loan applications ranges from data on race, gender, and sexual orientation of loan applicants, to geographic census-tract geographic data. 

Small businesses rely on lending from financial institutions as a critical lifeline to create jobs and expand their operations. In the words of Rep. Williams, “Small businesses are the backbone of the American economy, and it is crucial that they can access affordable credit to support and grow our communities,”. Estimates reveal that roughly half of all Americans are directly employed or run a small business.  

The fact that the Consumer Financial Protection Bureau is targeting a significant sector of the economy should raise concerns. This is especially the case when these requirements do not exist for larger businesses, putting smaller enterprises at a disadvantage when it comes to banks making decisions regarding lending and credit allocation. Large corporations, due to their size and stability, already enjoy an advantage in receiving more favorable financing through lower interest rates.  

The CFPB states that its goal is to “facilitate enforcement of fair lending laws, and… enable communities, governmental entities, and creditors to identify business and community development needs and opportunities of women-owned, minority-owned, and small businesses.” 

 The added costs of these reporting requirements are significant. Eliminating them would be a good start to encourage more lending to support small businesses, especially in an economic environment where higher interest rates and tighter credit conditions have become the norm. 

According to the CFPB’s calculations, the estimated impact would cost financial institutions tens of thousands of dollars per year, however, this would disproportionately impact smaller financial institutions, for whom the average cost of reporting would be much higher per loan application due to the smaller number of loan applications received relative to larger banks.  

The structure of section 1071 places a heavier burden on smaller financial institutions, such as credit unions and community banks, since they are usually more attuned to servicing small businesses.  

By disadvantaging smaller financial institutions, section 1071 inadvertently creates more concentration in the financial sector. Larger banks are better– equipped to absorb regulations that smaller banks cannot.  

Section 1071 weakens the competitiveness of the U.S financial sector, places an unproven regulatory burden, and ultimately harms a significant driver of the US economy.  

Rep. Williams’ bill offers a common-sense solution to alleviate a source of excessive regulation preventing main street from unleashing prosperity. Addressing section 1071 would help further enhance access to credit for businesses and reduce costs.  

The reconciliation bill currently offers the quickest pathway to stave off its implementation. Other positive provisions within the bill effectively prohibit the CFPB from receiving any profits from the Federal Reserve to fund itself and alter the pay scale for federal reserve employees, saving almost $1.5 Billion in taxpayer money. 

Lawmakers wishing to stimulate growth in the private-sector and among small businesses should curtail section 1071 by supporting the One Big, Beautiful Bill Act and voting in favor of H.R 976.