Letter to CFPB Acting Director Russell Vought on Proposed Regulation B Rules — Sen. Edward J. Markey et al.

Summary

A letter dated January 21, 2026 to Russell Vought, Acting Director of the Consumer Financial Protection Bureau, signed by Senators Edward J. Markey, Elizabeth Warren, Mazie K. Hirono and Cory A. Booker. It opposes two CFPB proposed rules published on November 13, 2025: one revising the Section 1071 small business lending data rule under Regulation B, and one on disparate impact under the Equal Credit Opportunity Act. The letter argues the Section 1071 proposal narrows data collection, citing exclusion of merchant cash advances and a revenue threshold lowered from $5 million to $1 million. It also objects to changes to discouragement standards and Special Purpose Credit Programs. The senators pose seven questions, request written answers by February 4, 2026, and urge the CFPB to withdraw both proposed rules.

Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used

Full text

                                               January 21, 2026


The Honorable Russell Vought
Acting Director
Consumer Financial Protection Bureau
1700 G St NW
Washington, DC 20552

Dear Acting Director Vought:

    We write to express opposition to two Consumer Financial Protection Bureau (CFPB)
proposed rules published on November 13, 2025: (1) Small Business Lending Under the Equal
Credit Opportunity Act (Regulation B), which would eviscerate Regulation B, subpart B of the
Equal Credit Opportunity Act (ECOA), implementing changes to it made by Section 1071 of the
Dodd-Frank Wall Street Reform and Consumer Protection Act and (2) Equal Credit Opportunity
Act (Regulation B), which would undermine the ability to bring fair lending claims based on the
disparate impact of facially neutral policies. 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.

    In 2023, the CFPB issued a final rule to implement Section 1071 by adding subpart B to
Regulation B. The proposed Section 1071 rule that the CFPB has now promulgated is far from a
refinement of its 2023 rule. Rather, it is a full retreat from creating a comprehensive and
meaningful picture of small business lending in the United States, as Section 1071 intended.1 The
proposed rule would substantially undermine congressional intent and harm small businesses,
especially minority-owned and women-owned firms, by perpetuating longstanding knowledge
gaps in lending practices.

    The CFPB’s 2023 rule to implement Section 1071 recognized that if we want fair markets,
we need fair and complete information. Congress did not ask the CFPB to collect the bare
minimum of data, and only from the biggest banks and credit unions. Congress asked for real
insight and sunlight. The proposed rule replaces sunlight with a keyhole perspective.

    Indeed, the proposed rule disregards the importance of a more complete understanding of
small business credit markets and perpetuates knowledge gaps in largely unregulated forms of
alternative lending, such as merchant cash advances. This type of financing is more likely to
affect minority entrepreneurs, who are more likely to be denied traditional financing and seek out


1
 Small Business Lending Under the Equal Credit Opportunity Act (Regulation B), 90 Fed. Reg. 50952 (proposed
Nov. 13, 2025) (to be codified at 12 C.F.R. pt. 1002), https://www.federalregister.gov/documents/2025/11/13/2025-
19865/small-business-lending-under-the-equal-credit-opportunity-act-regulation-b.
The Honorable Russell Vought
Jan. 21, 2026
Page 2

alternative financing.2 The growth of this market should be carefully monitored, given the
frequent lack of transparency and expensive cost of credit by lenders in this field,3 yet the
proposed rule inexplicably removes merchant cash advances from reporting requirements. It also
excludes agricultural lending products from data collection, again leaving critical knowledge
gaps in an important lending market.

    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. As Small Business Majority and the National
Community Reinvestment Coalition notes, raising the covered loan origination threshold would
exempt the vast majority of banks from reporting requirements and lowering the small business
revenue threshold from $5 million to $1 million means that a significant share of small business
loans would be exempt from data collection.4 If this were a weather forecast, it would be based
on one thermometer, indoors, with the window closed.

    This matters because we have evidence that access to capital is not evenly distributed, and
that these gaps persist even when lenders rely on so-called neutral measures such as credit scores
and revenues. Research from MassINC makes clear that entrepreneurs of color, especially those
operating small businesses, face systemic barriers to growth capital that constrain job creation
and regional economic performance.5 The Boston Foundation’s work similarly shows that Black-
and Latino-owned businesses apply for financing at higher rates than white-owned businesses
but are denied at dramatically higher rates.6

    These outcomes cannot be explained away by credit risk alone. These are not delusions. They
are real structural patterns that require serious data collection to understand the problem and
work towards a solution. The CFPB understood this when it finalized the 2023 rule.7 That rule
was intentionally broad because the problem is broad. It captured lenders that actually shape
local credit markets and businesses that are actually trying to grow. This proposal, by contrast,


2
  2022 Report on Firms Owned by People of Color: Based on the 2021 Small Business Credit Survey, Federal
Reserve (June 29, 2022), https://www.fedsmallbusiness.org/reports/survey/2022/2022-report-on-firms-owned-by-
people-of-color.
3
  CFPB Study Details the Rapid Growth of “Buy Now, Pay Later” Lending, Consumer Financial Protection Bureau
(Sept. 15, 2022), https://www.consumerfinance.gov/about-us/newsroom/cfpb-study-details-the-rapid-growth-of-
buy-now-pay-later-lending/.
4
  National Community Reinvestment Coalition, Comment Letter on Proposed Rule to Small Business Lending
Under the Equal Credit Opportunity Act (Regulation B) (Dec. 12, 2025),
https://www.regulations.gov/comment/CFPB-2025-0040-0228;
Small Business Majority, Comment Letter on Proposed Rule to Small Business Lending Under the Equal Credit
Opportunity Act (Regulation B) (Dec. 15, 2025), https://www.regulations.gov/comment/CFPB-2025-0040-0262.
5
  Ben Forman, Unleashing the Potential of Entrepreneurs of Color in Massachusetts, MassINC (Mar. 29, 2021),
https://massinc.org/research/entrepreneurs-of-color/.
6
  “The Color of the Capital Gap: An Update and Discussion,” The Boston Foundation (Nov. 28, 2023),
https://www.tbf.org/news-and-insights/videos/2023/november/color-of-the-capital-gap-recap-20231128.
7
  Small Business Lending Under the Equal Credit Opportunity Act (Regulation B), 88 Fed. Reg. 35150 (finalized
May 31, 2023), 12 C.F.R. § 1002, https://www.federalregister.gov/documents/2023/05/31/2023-07230/small-
business-lending-under-the-equal-credit-opportunity-act-regulation-b.
The Honorable Russell Vought
Jan. 21, 2026
Page 3

draws its boundaries so tightly that entire segments of minority entrepreneurship disappear from
view.

    Any burden for lenders cannot override the compelling need to collect this vital data, which
Congress has mandated. The impact on lenders is absent from the statute, absent from the lived
experience of small business owners denied fair access to credit, and absent when communities
are asked to bear the cost of opaque markets. The current rule reflects extensive compromise,
phased implementation, and years of engagement with industry. To now suggest that the answer
to complexity is near-blindness is an abdication of the CFPB’s role in implementing the statute.

    Congress enacted Section 1071 because it understood that incomplete data results in policy
failure. A rule that captures only a narrow slice of lending activity cannot facilitate fair lending
enforcement, cannot identify unmet community credit needs, and cannot meet the statute’s core
purposes. It may reduce paperwork. It will not reduce discrimination. It will, however, make it
easier not to see it.

    On the same day that the CFPB published the proposed rule to eviscerate its 2023 rule
implementing Section 1071, it also proposed a rule to amend provisions relating to disparate
impact.8 That proposed rule (1) limits the ability to assess discrimination or bring fair lending
claims based on the disparate impact of facially neutral policies, (2) redefines discouragement in
ways that allow discriminatory practices in marketing, soliciting, and accepting applications, and
(3) targets private, for-profit lenders that operate Special Purpose Credit Programs (SPCPs). The
proposal would undermine programs and tools meant to prevent, address, and remedy lending
discrimination, including by gutting protections against multiple forms of discrimination against
small businesses.

    Discrimination is not always obvious. Policies that are designed to be facially neutral can
have a disparate impact on certain populations: as previously detailed, studies have shown that
minority entrepreneurs operating small businesses face higher denial rates and different
treatment compared to non-minority entrepreneurs, even when they have similar or stronger
business financials or other characteristics.9 Yet, the CFPB 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 ability to bring
legal claims based on disparate impact is an important tool for addressing discrimination. The
Administration seeks to undermine this tool by prohibiting disparate impact claims under ECOA
and discouraging lenders from assessing the disparate impact of their policies, which will impair

8
  Equal Credit Opportunity Act (Regulation B), 90 Fed. Reg. 50901 (proposed Nov. 13, 2025) (to be codified at 12
C.F.R. pt. 1002), https://www.federalregister.gov/documents/2025/11/13/2025-19864/equal-credit-opportunity-act-
regulation-b.
9
  Anneliese Lederer et al., Lending Discrimination within the Paycheck Protection Program, National Community
Reinvestment Coalition (July 15, 2020) https://www.ncrc.org/lending-discrimination-within-the-paycheck-
protection-program/
The Honorable Russell Vought
Jan. 21, 2026
Page 4

the ability of minority and underserved entrepreneurs to avoid and readdress discriminatory
practices impacting their ability to obtain credit.

    ECOA is also designed to prevent lenders from discouraging certain applicants on the basis
of their ethnicity, sex, age, and more. Current regulations stipulate that lenders are prohibited
from making statements, including in advertising, that “express, imply, or suggest”
discriminatory practices or policies.10 The proposed rule would limit “discouragement” only to
explicit statement of discriminatory practices or policies. Again, these changes would allow for
insidious forms of discrimination that are not always directly expressed.

    Finally, the proposed disparate impact rule meddles with the ability of lenders to operate
SPCPs, a tool to reach minority and underserved communities that face unique barriers to
accessing financing. The Administration seeks to prevent lenders from “using the prohibited
basis of race, color, national origin, or sex, or any combination thereof, of the applicant, as the
common characteristic in determining eligibility for the SPCP.”11 Lenders operating SPCPs,
many of which have identified inequities in lending practices for certain entrepreneurs using both
qualitative and quantitative research, would be barred from providing targeted financial
assistance.

    Combined, the CFPB’s two proposed rules would obfuscate critical gaps and issues in
lending markets for small businesses, especially those in minority and underserved communities,
and would undermine tools meant to combat and remedy discrimination. We are left wondering
how the CFPB intends to square these proposals with the law Congress passed and the realities
small businesses face every day We therefore request written to answers to the following
questions by February 4, 2026:

     1. How does the CFPB believe the Section 1071 rule fulfills ECOA’s statutory purposes
        when it captures only a narrow slice of small business lending activity and excludes large
        segments of lenders and borrowers that shape local credit markets?
     2. What evidence does the CFPB rely on to conclude that data collected under this
        dramatically narrowed scope will be sufficient to identify patterns of discrimination or
        unmet credit needs, particularly for minority-owned and women-owned businesses?
     3. How does the CFPB reconcile the Section 1071 proposal with the current rule, which
        explicitly recognizes that comprehensive, application-level data across a broad set of
        lenders is necessary to create meaningful transparency in the small business lending
        market?
     4. What mechanisms does the CFPB intend to use to evaluate whether this reduced dataset
        is failing to meet the statute’s objectives, and what concrete benchmarks would trigger an
        expansion of coverage?



10
  12 C.F.R. 1002.4(b)(1)(ii)
11
  Equal Credit Opportunity Act (Regulation B), 90 Fed. Reg. 50901 (proposed Nov. 13, 2025) (to be codified at 12
C.F.R. pt. 1002), https://www.federalregister.gov/documents/2025/11/13/2025-19864/equal-credit-opportunity-act-
regulation-b.
The Honorable Russell Vought
Jan. 21, 2026
Page 5

   5. If the CFPB views this proposal as an interim or incremental step, what is the timeline—
      and what is the commitment—for restoring a data collection framework capable of
      meeting Congress’s clear mandate?
   6. What is the impact and cost of discriminatory lending practices on minority and
      underserved small businesses, and the positive economic impact of government policies,
      including special purpose credit programs, that seek to remedy such discrimination?
   7. Prior to publishing the proposed rule, did the CFPB conduct any stakeholder engagement
      or quantitative research to understand the barriers faced by minority entrepreneurs in
      credit markets, as well as the historic and present-day discrimination that presents such
      barriers?

    We urge the CFPB to withdraw these proposed rules and maintain the existing rules that
implement Section 1071, authorize disparate impact claims under ECOA, maintain current
discouragement standards, and allow lenders to operate SPCPs that target minority and
underserved populations – consistent with congressional intent to address serious problems in
small business lending.

                                           Sincerely,




 Edward J. Markey                                                Elizabeth Warren
 Ranking Member, Committee                                       Ranking Member
 on Small Business and                                           Committee on Banking,
 Entrepreneurship                                                Housing, and Urban Affairs




 Mazie K. Hirono                                                 Cory A. Booker
 United States Senator                                           United States Senator


File and source

File

2026-01-26_markey-to-cfpb_ranking-member-markey-lawmakers-condemn-cfpb-attacks-on.pdf

Size

332,123 bytes

SHA-256

b2ff5a07846f0bae2b3d8a659203c82844ae862011ab6e90f9f8b30b3c81a6d4

Our copy

2026-01-26_markey-to-cfpb_ranking-member-markey-lawmakers-condemn-cfpb-attacks-on.pdf

Original

No public link identified.