Despite a veto threat by President Joe Biden, the Senate voted Wednesday in bipartisan fashion to overturn a new rule from the Consumer Financial Protection Bureau that imposes "intrusive" demographic data collection and reporting requirements on small business lenders, Politico reported.

By a vote of 53-44, the Senate agreed to a resolution to formally disapprove of the CFPB's onerous data collection and reporting mandate on financial institutions about the recipients of small business loans that raise legitimate concerns about privacy, data security, discrimination, and potential lawsuits.

CFPB's new data collection and reporting requirements

In March, the CFPB issued a final rule promulgated under Section 1071 of the Dodd-Frank Act to significantly modify and expand upon certain basic data about small business loan recipients that financial institutions were already required to collect under the Equal Credit Opportunity Act.

Now, in addition to the basic loan information, lenders are required to ask small business loan recipients a host of questions about the "applicant’s minority-owned business status, women-owned business status, and LGBTQI+-owned business status," as well as the "applicant’s principal owners’ ethnicity, race, and sex," and report that data to the CFPB along with other particular transaction details.

Notably, while the financial institutions are required to request such private demographic data, the applicants aren't required to provide that information. However, the institutions can still get in trouble with the CFPB if they fail to collect and report said data.

"It's none of the CFPB's business"

Sen. John Kennedy (R-LA) opposed the CFPB's new rule and filed a resolution of disapproval under the Congressional Review Act to overturn and invalidate the rule, and that resolution came to the Senate floor on Wednesday for a vote.

In a floor speech, Kennedy spoke about the CFPB's "bad decision" to significantly expand upon the basic small business loan information Congress originally wanted collected under Section 1071 of the Dodd-Frank Act, from 13 pieces of data to 81 pieces of data, and accused the CFPB of having "totally perverted" the initial intentions of Congress.

Kennedy highlighted some of the intrusive questions that must be asked about a loan applicant's race, ethnicity, and gender identity, noted how that data would be posted on the CFPB's public website, and pointed out how that "incredibly private information" about applicants would be at risk of discovery and laid the groundwork for discrimination lawsuits, to say nothing of the additional compliance costs for financial institutions.

The resolution would "tell the CFPB it is none of their business ... what a private American does with another private adult American in the privacy of their bedroom. We are free -- so long as it doesn't break any laws -- to express our sexuality however we want to, and it's none of the CFPB's business," Kennedy said.

Kennedy urges leaderless House to "move quickly" on resolution

Following the passage of his resolution by the Senate, Sen. Kennedy said in a statement, "Small business owners are already suffering too much under Pres. Biden’s inflation, and the CFPB’s rule only further burdens them and puts their personal data at risk."

"The House should move quickly to pass this resolution so that lenders can continue to support small businesses and avoid unnecessary compliance costs," the Louisiana senator added.

Unfortunately, given the current lack of a House Speaker, the lower chamber is essentially paralyzed in terms of moving at any pace, much less quickly, on this resolution or a myriad of other pending legislation that must soon be addressed.

Biden would veto

Furthermore, Politico reported that the White House issued an administration policy statement that "strongly opposes" the resolution that, in its view, would "hamper the efforts to promote transparency and accountability in small business lending and create hurdles for mission-driven lenders and community organizations striving to close the most acute gaps in capital access for minority- and women-owned businesses."

That statement asserted that President Biden would veto the resolution if it were to reach his desk.