Banking and Finance Law Daily Wrap Up, EQUAL CREDIT OPPORTUNITY—Senate Democrats urge CFPB to reject changes to small business rules, (Jan 27, 2026)

By Nora Macaluso

The lawmakers say proposed changes to lending regulations would ‘gut’ discriminatory lending protections.

Senator Edward J. Markey (D-Mass.), the ranking Democrat on the Senate Small Business Committee, led a group of colleagues in urging the Consumer Financial Protection Bureau to oppose two proposed rule changes they said would “gut protections against discriminatory lending practices that harm small businesses.”

“The rule changes would undermine efforts to collect data on lending disparities and limit the ability of small businesses to bring discrimination claims under the Equal Credit Opportunity Act,” said Markey and Sens. Elizabeth Warren (D-Mass.), Mazie Hirono (D-Hawaii), and Cory Booker (D-N.J.).

The Bureau has proposed amending provisions of Reg B, the regulation implementing the ECOA, related to disparate impact, discouragement of applicants or prospective applicants, and special purpose credit programs (see Banking and Finance Law Daily, Nov. 12, 2025).

The lawmakers said the proposed rule, which would replace a 2023 rule implementing Section 1071, “replaces sunlight with a keyhole perspective,” collecting “the bare minimum of data, and only from the biggest banks and credit unions.”

“The proposed rule preserves just enough data to say the agency collects data, while ensuring that the results will be too thin, too partial, and too distorted to tell us anything useful about how capital actually flows in the real economy,” they wrote in a letter to CFPB Acting Director Russell Vought.

“The CFPB’s 2023 rule to implement Section 1071 recognized that if we want fair markets, we need fair and complete information,” the lawmakers wrote.

A companion proposal “would undermine the ability to bring fair lending claims based on the disparate impact of facially neutral policies,” the lawmakers wrote.

The CFPB said it proposed deleting language on disparate impact in response to an executive order from President Donald Trump to end “illegal preferences and discrimination” (see Banking and Finance Law Daily, Nov. 12, 2025). ECOA, the CFPB said in its proposal, does not state that disparate impact claims are cognizable under the act, and the inclusion of disparate impact language relied on legislative history.

“Discrimination is not always obvious,” the letter said. “Policies that are designed to be facially neutral can have a disparate impact on certain populations.”

The senators said the Bureau “failed to assess the impact of the proposed rule on small business borrowers or to conduct an initial regulatory flexibility analysis regarding those impacts.”

“The disparate impact standard, supported by decades of judicial precedent, has been a critical tool for enforcing fair lending laws by government entities and consumers,” the lawmakers wrote. “The ability to bring legal claims based on disparate impact is an important tool for addressing discrimination.”

“Both proposed rules represent an unwelcome step backward from addressing serious lending concerns in the small business community that Congress directed the CFPB to address,” they wrote.

The senators asked Vought to respond by February 4 to a series of questions about the proposals, including what evidence the Bureau relied on to conclude that the new data requirement will be sufficient, whether the CFPB conducted “stakeholder engagement” or research on the barriers minority entrepreneurs face in credit markets, and what mechanisms would be used to evaluate whether the lower data requirement is meeting the statute’s objectives.

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