Making the CFPB Accountable to Small Businesses Act of 2025

Bill Number

H.R. 1606

Origin Chamber

House

Congress

119th Congress, Session 1

Policy Area

Finance and Financial Sector

Status

Introduced

Latest Action

2025-02-26: Referred to the Committee on the Judiciary, and in addition to the Committees on Small Business, and Financial Services, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.

Last Updated

2025-04-01T08:06:53Z

AI-Generated Summary

Purpose

The "Making the CFPB Accountable to Small Businesses Act of 2025" (H.R. 1606) aims to strengthen requirements for certain federal agencies, particularly the Consumer Financial Protection Bureau (CFPB), to evaluate and minimize the impact of their regulations on small businesses. It builds on the Regulatory Flexibility Act (RFA), a law that requires agencies to consider how rules affect small entities (like small businesses), to ensure more thorough analysis and justification when regulations disproportionately burden them.

Key Provisions

• Short Title: The bill is titled the "Making the CFPB Accountable to Small Businesses Act of 2025."
• CFPB Rulemaking Requirements: Amends Section 1022(b)(2)(A) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (2010) to require the CFPB to explicitly assess the impact of proposed rules on small entities, following the RFA's guidelines in 5 U.S.C. § 609.
• Initial Regulatory Flexibility Analysis: Modifies 5 U.S.C. § 603(d)(1) to mandate that if an agency (defined as a "covered agency" under the RFA) rejects alternatives that could lessen the rule's burden on small entities—such as exemptions, simplified requirements, or delayed compliance—it must provide a detailed justification. This justification must explain why the small size and limited resources of these entities should not influence the rule, backed by facts, policy considerations, and legal reasoning.
• Final Regulatory Flexibility Analysis: Updates 5 U.S.C. § 604(a) to require covered agencies to describe steps taken to reduce any increase in the cost of credit (e.g., loans or financing) for small entities. If no significant alternatives are adopted, the agency must justify why small entities' size and resources are irrelevant, again supported by factual, policy, and legal reasons.

Significant Changes to Existing Law

• Expands the RFA's existing requirements for initial and final analyses by adding mandatory justifications when agencies dismiss considerations of small entities' size and resources.
• Specifically targets the CFPB by integrating RFA small-entity analysis into its Dodd-Frank rulemaking process, which previously did not explicitly require it.
• Introduces a focus on "cost of credit" in final analyses, addressing financial regulations' unique effects on small businesses' access to funding— an addition not previously emphasized in the RFA.

Potential Impacts

• On Government Agencies: Covered agencies, especially the CFPB, will face increased paperwork and analytical burdens during rulemaking, potentially slowing rule development but promoting more evidence-based decisions.
• On Citizens and Businesses: Small businesses (defined under the RFA as entities meeting size standards, like fewer than 500 employees for many industries) may benefit from reduced regulatory burdens, lower compliance costs, and better access to credit. Larger businesses and consumers could see indirect effects if rules become less stringent.
• On International Relations: Minimal direct impact, as the bill focuses on domestic financial regulation; however, it could influence U.S. financial stability perceptions abroad if it alters CFPB oversight of global banking practices.

Main Stakeholders Affected

• Small Businesses: Primary beneficiaries, gaining stronger protections against overly burdensome regulations.
• Consumer Financial Protection Bureau (CFPB): Directly required to incorporate small-entity analyses, increasing accountability.
• Other Covered Agencies: Financial regulators like those under the Federal Reserve or Securities and Exchange Commission (if designated under RFA § 609(d)(2)) must comply with enhanced analysis rules.
• Congress and Oversight Committees: The bill's referral to the House Committees on the Judiciary, Small Business, and Financial Services highlights their role in monitoring implementation.
• Consumers and Larger Financial Institutions: May experience changes in regulatory environment affecting consumer protections or market competition.

Notable Legal, Constitutional, or Political Implications

• Legal: Reinforces the RFA's intent to prevent unintended harm to small entities without altering core rulemaking authority under the Administrative Procedure Act (1946). It could lead to more challenges in court if agencies' justifications are deemed insufficient, promoting judicial oversight of regulatory impacts.
• Constitutional: Aligns with Congress's authority to regulate commerce and oversee executive agencies (Article I), potentially checking agency overreach while respecting separation of powers.
• Political: Signals a push for deregulation favoring small businesses, possibly appealing to pro-business lawmakers; it may spark debates on balancing consumer protections (CFPB's core mission) against economic growth for small entities, without shifting partisan control over the agency.

This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.

Sponsor

Rep. Fitzgerald, Scott [R-WI-5]

Cosponsors (3)

Rep. Fallon, Pat [R-TX-4], Rep. Meuser, Daniel [R-PA-9], Rep. Barr, Andy [R-KY-6]

Recent Actions

• 2025-02-26: Referred to the Committee on the Judiciary, and in addition to the Committees on Small Business, and Financial Services, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
• 2025-02-26: Referred to the Committee on the Judiciary, and in addition to the Committees on Small Business, and Financial Services, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
• 2025-02-26: Referred to the Committee on the Judiciary, and in addition to the Committees on Small Business, and Financial Services, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
• 2025-02-26: Introduced in House
• 2025-02-26: Introduced in House

Bill Versions

• Making the CFPB Accountable to Small Businesses Act of 2025 — issued 2025-02-26 — PDF (3 pages)