Supporters of the rule say it will help ensure that lenders distribute loans equitably to underrepresented borrowers.

Senate Banking Chair Sherrod Brown (D-Ohio) defended the rule, saying it would shed light on “gaps in the small-business lending market.”

The consumer bureau in March finalized the rule under Section 1071 of the Dodd-Frank law requiring financial institutions to turn over information about the race, ethnicity and gender of small business loan recipients, in addition to information on lending decisions and the price of credit. The first data reports, for lenders above a certain threshold of transactions, are due in October 2024.

The rule would “give the public key data on this market to ensure that banks and nonbanks are serving small businesses fairly,” CFPB Director Rohit Chopra said at the time.

The White House on Wednesday threatened to veto the bill.

The 1071 rule “will provide small business owners, lenders, and the public with critical information about the $1.7 trillion small business financing market,” the White House said in a statement of administration policy. “If enacted, this resolution would harm all those that stand to benefit from this expanded transparency and accountability.”

Republicans and banks have pushed back on the rule, accusing Chopra of regulatory overreach and arguing that the rule is both invasive and onerous to comply with.

Senate Minority Leader Mitch McConnell (R-Ky.) praised the resolution, casting it as an effort to “chip away at yet another example of the Biden administration’s run-away regulatory state.”

“Washington Democrats want to tie small business loans to diversity quotas,” McConnell said.

A federal court in Texas suspended enforcement of the rule for members of the American Bankers Association in July. The ABA, the Texas Bankers Association and Rio Bank had sued to block the rule until the Supreme Court resolves a case challenging the CFPB’s funding structure. The high court, which heard arguments in that case this month, is expected to rule on the matter by June.

Kennedy said the agency had “totally perverted” what Congress intended when it passed Section 1071 of Dodd-Frank in 2010.

“[The CFPB] took the 13 pieces of information we, the Congress, asked for and they expanded it to 81 — all of a sudden they want a book,” Kennedy said.

“This private information has got to be collected by the CFPB … and it’s not like the CFPB is exactly a wizard when it comes to data security,” he added, pointing to the breach of 256,000 consumers’ data earlier this year by a CFPB employee.