The small business community has expressed growing concern over how regulations enforced by the controversial newly-formed Consumer Financial Protection Bureau may affect them. Although the new agency claims to have very limited interaction and influence over small business, indications pointing to the contrary are beginning to arise. These concerns were discussed at the House Committee on Small Business, Subcommittee on Investigations, Oversight, and Regulations on July 28.
President Obama shakes hands with Richard Cordray after he was nominated as the director of the Consumer Financial Protection Bureau. (MANUEL BALCE CENETA / AP)
At the hearing, businesses expresses concern that some regulatory areas are overseen by both the Securities Exchange Commission (SEC) and the CFPB, potentially resulting in contradictory regulations, especially if the business falls within the ten broad categories of oversight (which many small businesses do). Small business owners have expressed the need for assurance from the CFPB that an orderly process for rule making prevail at the agency including a mandatory provision for receipt, consideration, and response to industry concerns.
The new small business data collection provision also adds additional application requirements in line with the Equal Credit Opportunity Act that will be expensive and burdensome for smaller firms to implement. Small businesses often face the highest costs for implementation of new regulations because administrative costs are unnecessarily raised. Additionally, overly broad definitions included in the areas of agency oversight, such as “significant” and “substantial,” will create unease that the CFPB will have more control over small business than originally intended. In general, growing concern was expressed that the CFPB will negatively affect small business, including franchising, and that not enough safe guards are in place to prohibit overregulation.
Posted by Gabby Reed, IFA Manager of Political Affairs