The U.S. Consumer Financial Protection Bureau (CFPB) has substantially narrowed Biden-era regulations designed to combat discrimination in small business lending. This decision significantly reduces the number of banks mandated to collect race and gender data from borrowers, marking a recent rollback of rules intended to prevent bias against racial and social minorities.
Under the new version, only banks originating 1,000 or more small business loans in each of the prior two years will be required to comply, a considerable increase from the previous threshold of 100 loans. The revised rule also removes references to gender identity or a business ownership’s LGBTQI+ status. Acting CFPB Director Russell Vought stated the change would make small business credit more affordable and minimise regulatory burden.
Industry groups, including the Bank Policy Institute and Consumer Bankers Association, largely welcomed the adjustment. While they previously raised concerns that narrowing the scope might affect data quality and fair lending enforcement, the CFPB contended the change would still encompass 92-93% of small business lending, primarily handled by bigger banks. Conversely, Americans for Financial Reform, a pro-consumer group, criticised the alteration as further weakening a crucial civil rights tool, deeming it “unnecessary and immoral.”
Mandated by Congress after the 2008 financial crisis, the original rule was finalised by the CFPB in 2023 under former President Joe Biden. It aimed to combat discrimination and promote investment via demographic data collection. Despite industry pushback and legal challenges, the revised rule is set to take effect in January 2028.
