A bill introduced this week would repeal Section 1071 of the Dodd-Frank Act.
The bill was introduced Feb. 4 by House Small Business Committee Chair Roger Williams (R-Texas). Established by the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, Section 1071 would require lenders to collect and report information on the race, sex and ethnicity of the principal owners of the small business applicant as well as the company’s gross annual revenue.
The largest lenders were expected to have to start collecting borrower data this summer, with smaller lenders having later compliance dates, but those timelines are now in doubt after President Donald Trump’s inauguration earlier this month.
The Consumer Financial Protection Bureau, which is operating under Trump-appointed Acting Director Scott Bessent following the recent firing of Rohit Chopra, filed an emergency order this week seeking a pause on implementing Section 1071.
Williams said Section 1071 has added millions of dollars in increased compliance costs for lenders; reduced credit access for small businesses; and caused disproportionate regulatory burdens on community banks.
“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,” Williams said. “My bill seeks to eliminate costly regulatory burdens on financial institutions, ensuring greater access to credit for small businesses.”
Republican lawmakers Frank Lucas of Oklahoma, Ann Wagner of Missouri, Mike Flood of Nebraska and Bill Huizenga of Michigan cosponsored the bill. It will need to pass the House before it faces a 60-vote hurdle in the Senate. Williams sponsored a similar bill during the previous administration of Joe Biden, who vetoed the proposal.
The Independent Community Bankers of America and American Bankers Association support the bill. The ICBA called Section 1071 “misguided data collection requirements that would significantly degrade the ability of community banks to meet the needs of small businesses, require financial institutions to burden their customers with invasive and personal questions, and permit the CFPB to publicly report this sensitive data.”
Conference of State Bank Supervisors President and CEO Brandon Milhorn said Section 1071 “missed the mark. By going well beyond the data elements required by the law, the rule imposed unnecessary burdens on banks and their small business customers. Small businesses need access to credit to form and grow, and we welcome congressional action to restore appropriate balance to this reporting requirement.”
In 2024, the Texas Bankers Association, American Bankers Association and Texas Bankers Association sued the Consumer Financial Protection Bureau to prevent it from implementing Section 1071. The lawsuit, which alleges that Section 1071 violates the Administrative Procedure Act, is ongoing.