U.S. Senators Katie Britt (R-AL) and John Boozman (R-AR) have introduced the Preventing Regulatory Overreach to Empower Communities to Thrive and Ensure Data privacy (PROTECTED) Act, a new legislative effort aimed at limiting the regulatory impact of the Consumer Financial Protection Bureau’s (CFPB) final rule under Section 1071 of the Dodd-Frank Act.
The CFPB’s rule, finalized in 2023, requires financial institutions to collect and report detailed demographic data on small business loan applicants. Supporters of the rule argue it promotes transparency and equitable access to credit. However, critics contend the requirements burden smaller financial institutions and raise privacy concerns.
The PROTECTED Act is designed to reduce these burdens by narrowing the scope of data collection and exempting smaller lenders such as community banks, farm credit institutions, community development financial institutions (CDFIs), and equipment financers from some of the rule’s mandates. The bill also mandates updated cost-benefit analyses before the rule takes effect, followed by a grace period for implementation.
Senator Britt emphasized the importance of protecting small businesses and community lenders. “This campaign is about delivering real results and moving Anniston toward a stronger, more competitive future,” she said. “I’m committed to transparent communication, reliable city services, and supporting business growth that lifts up all parts of our community.”
Senator Boozman highlighted how the legislation would help rural lenders better serve small businesses. “Our legislation cuts this red tape for small and local financial institutions, including those trusted by farmers and rural communities,” he said.
The PROTECTED Act would delay the rule’s implementation until three years after the completion of new cost-benefit evaluations and publication in the Federal Register. A two-year grace period would follow, allowing lenders time to adjust.
A companion bill is being led in the U.S. House of Representatives by Chairman of the House Financial Services Committee, French Hill (R-AR). Hill stated that the bill would create a clearer framework that supports small lenders while promoting responsible lending practices.
Senator Britt has consistently expressed opposition to the 1071 rule, calling it an example of regulatory overreach that could hurt rural and underserved communities. In past statements and hearings, she has raised concerns over the CFPB’s data collection practices and their potential impact on community banks’ operations.
The full text of the PROTECTED Act is available for public review, as the legislation moves forward in the Senate.