Will the Consumer Financial Protection Bureau Start Regulating Commercial Lending to Small Businesses? A brief analysis of the current state of commercial regulation and evaluating its future

in Finance/Government/Public Policy/Volume III

By Scott Natsuhara           

We now live in a world where we are accustomed to heavy disclosures and regulations in our daily banking transactions. It may be hard to believe that before the Frank-Dodd Act, opening a bank account or applying for a loan required only a fraction of the paperwork.  Neither did applying for new accounts or loans require tremendous effort in cutting through “rolls of red tape”[1] that exists today for such procedures.  The Frank-Dodd Act created significant changes in consumer protection. In particular, the Federal Government established the Consumer Financial Protection Bureau (CFPB) in 2009, which Congress vested with the power to regulate consumers’ interactions with banks.

It is unclear if these consumer protection regulations that limit abuse from financial institutions apply to small business owners and if the CFPB may regulate financial transactions with small business owners.  Also, there is uncertainty as to which agency regulates commercial lending, or if it is regulated at all.  This uncertainty presents some serious issues.  First, many small business owners do not differ from the average consumer when interacting with banks.  Therefore, they should be entitled to the same legal rights in consumer protection.  Second, the fact that no government agency focuses on regulating commercial lending is a concerning policy approach.  Third, many of the same consumer abuses and discriminatory lending practices also persist in commercial lending with small business owners, therefore justifying a call to action to regulate this area.   

In this article I explore these issues and discuss their legal impact on both the banking industry and the law firms that serve them.  The article is divided into four parts.  Part I analyzes the difference between the small business owner and the consumer.  Part II evaluates who regulates commercial lending.  Part III discusses current problems in commercial lending and Part IV discusses what may be next for the CFPB and small business owners combined and an outlined suggestion for the future. 

I. There is No Difference Between Consumers and Small Business Owners

A small business owner applying for a loan and a consumer applying for a loan are not that different.  Many of the same problems that drove Congress to act on consumer protection issues also affect small business owners. 

In typical commercial lending transactions, larger corporations can hire law firms or rely on in-house counsel to review legal documents provided by the bank and possibly negotiate better terms.  Here, there are sophisticated borrowing entities negotiating on fairly equal footing to complete a lending transaction; a seemingly fair approach that does not require government intervention.

However, small businesses and banks are typically not on equal footing, and small businesses operate very similar to average consumers with minimal exceptions.  For example, the average consumer rarely has access to lawyers to review loan documents. This bargaining power imbalance has drawn public criticism and is one reason that Congress saw fit to afford the average consumer protection through the CFPB.  Much like consumers, small business owners do not have access to lawyers and other important resources to review complicated loan documents, nor do they operate as sophisticated borrowers.  A small business would typically be a consumer or small group of consumers merely operating as a corporate entity.[2]  While a small business owner’s liability may be limited unlike consumers, the bargaining dynamic is still very different from large corporations and does not necessarily justify excusing the CFPB from protecting them.  But the CFPB currently does not regulate financial institutions’ interactions with small business owners.

II. Who Regulates Commercial Lending?

There is some chaos and confusion in regulating commercial lending but there are three governmental agencies that appear to be tasked with regulating commercial lending to small business owners: (1) Office of the Comptroller of Currency (OCC), (2) the Small Business Administration (SBA), and (3) the Consumer Financial Protection Bureau (CFPB).  Each agency will be discussed below as to why they fall short in regulating commercial lending.  However, I conclude that the CFPB is the best of the three to regulate commercial borrowing for small business owners.

A. Office of Comptroller of Currency

            The Office of Comptroller of Currency (OCC) is an independent bureau of the U.S. Department of the Treasury that focuses on regulating banking in the United States. The mission statement explains:

The OCC charters, regulates, and supervises all national banks, federal savings associations, and federal branches and agencies of foreign banks.  We ensure that the banks we supervise operate in a safe and sound manner, provide fair access to financial services, treat customers fairly, and comply with applicable laws and regulations. The OCC receives no appropriations from Congress.[3]

This mission statement indicates that the OCC is focused on regulating commercial lending, but there is no discussion or link to consumer protection in the small business lending section, as seen in the retail credit section of their website.[4]  Instead, the OCC is more focused on regulating banks so the banks do not fail as financial institutions and enforcing particular compliance requirements to protect investors and avoid any bank leveraging Federal Deposit Insurance Corporation (FDIC) protection.  This approach implies the OCC is more concerned about inspecting for the possibility of default in the small business credit portfolio and are not concerned with fair lending practices and consumer abuses.  While some may consider this conjecture, other factors should be considered.

In contrast to consumer loans, small business loans rarely are packaged into securities.  Instead, small business loans are carried on the bank’s balance sheet, which increases the risk to the bank.  Consumer loans are typically packaged into securities, reducing risks for the originating lender.  Therefore, small business loans require a greater level of monitoring to protect against loss on the bank’s balance sheet.  The greater effort on monitoring forces the bank to utilize more resources and therefore justifies increasing the price.  However, the OCC does not discuss interest rate pricing or appropriate fee scales on small business loans.  This absence establishes no pricing guardrail on small business loans like the ones we see in consumer loans, further suggesting the OCC is more concerned with protecting investors to prevent default in the bank’s credit portfolio[5] rather than for small businesses receiving loans. 

B. The Small Business Administration

            The Small Business Administration is an independent government agency that provides support to small businesses.  The SBA administrator is a presidential appointee and serves as a cabinet-level official, directly reporting to the President.  The SBA mission statement states:

Created in 1953, the U.S. Small Business Administration (SBA) continues to help small business owners and entrepreneurs pursue the American dream. The SBA is the only cabinet-level federal agency fully dedicated to small business and provides counseling, capital, and contracting expertise as the nation’s only go-to resource and voice for small businesses.[6]

The SBA specifically discusses capital in its mission statements, stressing the importance of access to capital.  Furthermore, the agency helps facilitate access to capital through SBA loans specifically designed for small business owners.  The SBA can work with banks to provide a “guarantee” which operates like insurance for small business lenders to promote small lending in the community.[7]  This is supposed to encourage banks to approve credit transactions more aggressively, thus increasing access to credit for small business owners who may have the inadequate cash flow or collateral to traditionally qualify. 

While this appears to be a positive government program, there is much criticism regarding the program’s actual impact.[8]  First, it is unclear how much banks actually are incentivized to leverage the program.  SBA programs consist of extra “work and effort” for commercial lenders, who typically focus on prospecting customers who can qualify for loans without SBA guarantees.  Second, the rate and terms may not be favorable to small business owners, creating a “lack-of-choice” issue.  Conventional loans will typically offer a better interest rate because there is less risk typically involved in a transaction that does not require the SBA guarantee.  For example, an SBA loan will permit a higher loan to value ratio (less collateral value coverage to the debt) or permit lower debt service coverage (weaker ability to repay than customarily accepted by banks).  These permissions indicate higher risks, therefore justifying a higher interest rate.  Although insurance helps to encourage the bank to make the loan, the government insurance is not necessarily useful in suppressing the rate to a competitive price with traditional lending. 

Small business owners are usually stuck with the higher SBA rate when they do not qualify for conventional lending.  Banks can argue that a higher interest rate and fees are appropriately associated with the increased risk and extra work on their end. Still, this structure is exacerbated by the social and economic divide between small businesses with limited wealth versus large corporations and wealthy small business owners who can also leverage their financial position to get more favorable terms in lending.  Accordingly, small business owners will struggle. This struggle also correlates with minority small business owners’ challenges in commercial lending, as discussed in section three.

C. The Consumer Financial Protection Bureau

The Consumer Financial Protection Bureau (CFPB) is an independent agency that regulates consumer lending activity.  As the newest agency, it is also the most controversial of the three, still embattled on the constitutionality of its existence.  The CFPB, which originated from the Frank-Dodd Act, set forth several reforms on Wall Street, one reform being consumer protection.  The Bureau mission statement is as follows:

We aim to make consumer financial markets work for consumers, responsible providers, and the economy as a whole. We protect consumers from unfair, deceptive, or abusive practices and take action against companies that break the law. We arm people with the information, steps, and tools that they need to make smart financial decisions. In a market that works, the prices, risks, and terms of the deal are clear upfront so that consumers can understand their options and comparison shop. Companies all play by the same consumer protection rules and compete fairly on providing quality and service. To achieve this vision, the CFPB works to: Empower, Enforce, and Educate.[9]

The CFPB focuses on leveling the playing field so that the average consumer gets fair terms and better understand the costs and benefits of their banking or lending options.  The CFPB’s efforts neutralize the traditional bargaining power gap between banks and consumers that only wealthy clients typically enjoy.  Shrinking this gap also helps protect consumers from deceptive practices that took place before the Frank-Dodd Act. 

Although fairly new, the CFPB has made a few significant steps in regulating financial institutions.  The most significant achievement is their 2016 investigation into Wells Fargo’s deceptive practice that resulted in massive fines and caused the CEO to step down.[10]  Wells Fargo was fined again in 2018 for mortgages and auto loans with excessive rates.[11]  However, the CFPB has lost some steam and slowed down their activity due to political contestation. 

Regarding small businesses, the CFPB is not currently tasked with regulating their relationships with financial institutions.  However, the CFPB does have the power to “organize a Small Business Review Panel when we’re working on a rule that could have significant economic impacts on small entities. Small entities include small businesses, organizations, and small government bodies.”[12]  As of today, the Panel can issue a report on proposed CFPB rules, and the CFPB will discuss and consider that report.[13]  In theory, this process only operates as feedback for the CFPB on their rules and their connection to small businesses and does not enable the CFPB to operate on findings that point to potential abuses.  However, change may occur soon.  On September 15, 2020, the CFPB released an outline on how it plans to collect data on small business loans, particularly focusing on women-owned and minority-owned businesses.[14] 

III. Current Problems in Commercial lending

Two major problems currently exist in commercial lending: (1) unequal access to fair credit for minority-owned businesses; and (2) poor transparency on the pricing for commercial credit for small businesses, which indicates unfair practices.  These two problems are not an exhaustive list, but rather the greatest concern for the public and small business owners and most likely to draw a government response.  Additionally, these are systemic problems that are ripe for legal reform and require extensive attention.

Several issues drive unequal access to fair credit for minority-owned small business owners.  First, the loan sizes create a problem.  Small business owners typically pursue the smaller loan sizes and there is no competitive market for smaller loan sizes.  For example, a larger loan is a more efficient process for a bank or banker to reach revenue goals.  Each loan funded by the bank requires extensive monitoring, which includes additional risks to their business model.  The additional costs associated with monitoring loans and risks create additional expenses for the bank on each originated loan.  Second, small loans are likely to be considered riskier loans in the marketplace.  Despite a market for small business loans, small business owners are limited in choice in the marketplace and this ultimately enables racial discrimination in small business lending. 

In Jackson III’s study, after analyzing the differences between firms that apply for loans of less than $50,000 and more than $50,000, they found that African American owners were more likely to be declined for loans and pay a slightly higher interest rate.[15]  On its face, this is disappointing information for anyone that wants to end such discriminatory practices.  Jackson and his co-authors acknowledge that lower credit scores were associated with the minority applicants, which could be considered a justified process to charge a higher rate.[16]  However, the lower credit scores also point to the same systemic problem that triggered such results, making this contention largely moot.  Additionally, using a consumer credit report to make such decisions on loan applications suggests that the CFPB should look further into this matter because it is clear that consumer information is driving lending decisions, creating concern for actual consumer abuse. 

Similar struggles exist for women-owned small businesses. In Susan Coleman’s article, Access to capital and terms of credit: A comparison of men- and women owned small businesses, she found systemic results that demonstrated women receive higher pricing on small business loans than their male counterparts.[17] Additionally, women were required to put up more collateral, and their small business loans had less favorable conditions than their male counterparts.[18] Coleman acknowledges the basic tenets of analyzing risk in credit and suggests that male-owned businesses have a stronger correlation to some of these tenets, such as length in business or lower profitability.[19] However, this correlation also points to a systemic issue that male business owners are typically in business longer and enjoy greater profits because of their historical advantages in society.

The problem continues to be exacerbated by “FinTech” lenders. “FinTech” lending is a specific lending industry dedicated to quick online access to capital, associated with higher interest rates and limited regulation. In October of 2018 Congressman Cleaver announced the initial findings on Small Business FinTech investigation that points to possible abuses.[20] The survey results acknowledged that minority small business owners are more likely to use FinTech than the broader small business credit market.[21] This report follows logically from our analysis because minority small business owners struggle with conventional access to small business loans; therefore they would settle for Fintech lending options with higher interest rates. However, Fintech lending is only exacerbating the problem for minority-owned business treatment in small business lending. Therefore, a government attention is needed in the small business credit space to protect minority small business owners from future abuse.

IV. What's Next for the CFPB and Small Business Owners?

There are several legal implications that may result from the possible administrative changes determined by both the 2020 election and potential replacement of the current director. Political turmoil surrounding the CFPB makes it very difficult for the legal industry to prepare and respond to any potential commercial lending regulation adequately. However, lawyers are aware that the small business lending policies could change. Government could take a more progressive approach given the recent problems, further exposed by the COVID crisis, discussed below. Failure of the government to increase their attention to regulating small business lending could further damage the small business community already ravaged by the COVID crisis.

A. Legal Implications for the CFPB

The CFPB’s 2020 report outlines the CFPB’s goal to collect data on small business loans. This report should be the first step toward making serious changes in the law, which the legal industry needs to be prepared for.

First, law firms must adequately prepare their compliance departments to adjust to changes in administrative law. Once the CFPB announces a new rule, banks will rush to make changes to meet the new compliance standards. These regulatory changes will affect the pricing scheme for small business lending, especially because this pricing is arbitrary, based on how banks evaluate credit risks. Banks benefit when there is little to no regulation in the small business credit space, therefore pricing regulation will impact their profits in one of three ways: (1) Banks will either raise their pricing, which will reduce volume of the loans at a faster rate than is recovered through pricing, (2)banks will approve fewer loans which will hurt overall revenue, (3) banks will be forced to take small margins on their small business loans, lowering their typical profit obtained in the small business credit space. Each impact can have serious consequences that the legal community should consider and advise their banking clients on.

Second, lawyers will have to consider the business decisions and profitability concerns regarding regulation in small business lending. Pricing regulation could lead to lower profits, and therefore lawyers must take extra steps to meet compliance without sacrificing their clients’ profits. Also, adjusting to the CFPB rules could lead to greater defaults in the banks’ credit portfolios. By approving more loans correlated with higher credit risks at the demand of the CFPB, the bank will take more losses, which also hurts profitability. Additionally, legal costs will increase for the bank, creating a significant expense that lawyers must prepare clients for. The first round of expenses will come from the initial adjustments to the CFPB rule announcement. The second round of expenses will come after the first set of administrative decisions on applying the CFPB rules are made. Some rules may not be written to apply to every situation expressly; judgment calls will be made, and the new precedent will trigger new reforms and client costs.

Third, law firms should target small business clients to represent them more aggressively. Typically, small business owners accept the terms provided by the bank on their loan offer. However, lawyers can now utilize the new CFPB opportunity as a chance to initiate class actions against banks that do not follow the potential new CFPB rules. Additionally, there will be an opportunity for legal work on unclear areas of the new CFPB rule to benefit small business owners. While people may be critical of class action suits and similar types of legal work, most agree there is some benefit for a flush of legal representation for a group that has typically never been represented before when working with banks. This change in the industry will lead to some positive changes before people criticize this excessive practice.

B. Political Challenges for the CFPB

The Dodd-Frank Act, which was contentious legislation, gave rise to the CFPB. U.S. Senator Elizabeth Warren (D-MA) started as a staunch advocate for this agency based on her early literature in 2007 and helped include the CFPB in this legislation.[22] The creation of the CFPB was met with strong criticism at every step, though. In its creation, Congress members with banking industry ties were concerned with the Dodd-Frank Act and pushed to stall its development.[23] Even after its creation, there was intense debate on who should serve as the director. Elizabeth Warren was the first choice but was met with strong resistance. Richard Cordray, who seemed like he was slightly more favorable to get confirmed, also faced opposition.[24] It seemed that stopping the appointment of a director would indirectly stop the efforts of the CFPB to exist in the government, but then President Obama utilized a recess appointment, which has its own constitutional concerns, to appoint Richard Cordray.[25] Former Senator Harry Reid (D-NV), then majority leader, helped to confirm Cordray.[26]

While Cordray’s appointment solidified the CFPB, he has never seemed safe from removal. The CFPB has won some victories in uncovering major abuses since its inception, but after the 2016 election, a new challenge was mounted to its existence. Congress quickly weakened its ability to void arbitration agreements in bank consumer agreements. Director Cordray resigned after the election, and Mick Mulvaney, who disliked the CFPB, assumed the position.[27] Critics of this appointment argued that the Trump Administration’s goal was to “do nothing,” which was part of the new policy goals to deregulate many parts of the economy.[28] There are new arguments as to the CFPB’s constitutionality, which have been introduced by Mulvaney’s replacement, making its future even more unclear.[29] Lastly, we acknowledge that the future is election dependent, where a change in Congress or presidency could cause some policy changes. Still, it would likely take an external catalyst for the CFPB to begin to regulate small business lending.

In sum, this political chaos makes it very difficult for the legal industry to prepare and respond to any potential commercial lending regulation adequately. However, people are aware that small business lending policy could continue to change. Government might take a more aggressive approach given the recent problems discussed in this article, further exposed by the COVID-19 pandemic.

C. COVID-19 Crisis and the Problems with CARES ACT and PPP Loans

When the COVID-19 pandemic started, the government responded by passing the CARES Act.[30] The CARES Act established the Paycheck Protection Program (PPP), enabling businesses to quickly access capital to cover payroll for their employees in an effort to keep them on staff, along with other expenses.[31] However, there was mass confusion on whether all businesses qualified, and large corporations applied for loans along with small businesses. Banks were also confused on several parts of the legislation, which made them slow to respond, and therefore they favored larger companies and clients with existing commercial credit facilities.[32] Initially, Chase and Wells Fargo were not participating in PPP, and Bank of America only offered PPP loans to clients who have an existing and open “commercial line of credit” or “commercial term loan.” When considering which businesses have commercial credit, larger corporations who more easily qualify for credit were first to receive the PPP funds. This highlights that small business with no existing credit relationship were not easily able to obtain PPP loans or get to the front of the applicant pool.

Secretary Mnuchin warned Congress several times that the funds could dry up, but the amount of funding for the PPP loans was never certain.[33] Therefore, businesses with easier access to credit benefitted most in the time of a crisis. When considering a government program like the PPP, which was a response to a global pandemic and an impending economic crisis, all businesses should have an equal opportunity to benefit, but this was not the case. This sequence of events truly highlights the economic disadvantage for small business owners compared to corporations, and minority-owned businesses compared to white-owned businesses. This delay in funding may be the difference between a small business surviving or failing. Additionally, small businesses likely made decisions in reliance on the belief that the PPP would run out or that they did not have an equal opportunity to receive such funds quickly. These are damages that may never be counted.

While the PPP did “save” certain members of the small business community, it is not clear how many small businesses were actually saved. Communities still lost many small businesses due to limited regulation on small business. This sad realization should be the catalyst for more regulation in small business lending and trigger a Congressional response, especially if the damages can be quantified and presented to the public with an emotional appeal.

V. Conclusion

It’s not clear who regulates commercial lending in the United States, and the result of that uncertainty is that no government agency takes sole responsibility for such a task. Whether this is by design (government preference) or by coincidence (confusion between agencies), harm results for the small business community. Many small business owners are not getting approvals or are receiving discriminatory terms and pricing due to unsatisfactory market conditions. Further racial discrimination impacts the current practices, with minority-owned businesses not receiving comparable access to credit or comparable access to pricing terms. These harms suggest the need for more regulation. The CFPB is the best candidate to regulate commercial lending, but the CFPB is young with a tumultuous short history. However, the recent criticism of the PPP loans has highlighted and drawn attention to this issue. The legal community should prepare for compliance changes when consulting financial institutions, and the legal community should take on small business clients in such matters because there will be a demand to help clarify these potential brand-new rules through the court system.

[1] Red tape is a common concept to describe excessive bureaucracy paperwork that seems burdensome and unnecessary. 

[2] It should be noted that small businesses can also exist as sole proprietors and partnerships that do not limit the liability of their owners.  This article naturally focuses on Corporations and Limited Liability Companies (LLCs), contrasting the difference between a large corporation and a small business corporation with one owner or less than a handful of owners.  I specifically highlight the stark difference between large corporation and small business and stress the problem that a small business lender can treat them the same, when such a process does not seem fair to small business owners that operate through an LLC or Corporate form. 

[3] https://www.occ.treas.gov/about/who-we-are/index-who-we-are.html.

[4] When navigating the website for consumer protection details, there is no option for small business lending. See https://www.occ.treas.gov/topics/consumers-and-communities/consumer-protection/index-consumer-protection.html.

[5] A credit portfolio is a group of loans (credit relationships) that are directly managed by the lender to verify repayment is on schedule and constantly confirm the default status of the loan.  See https://www.wise-geek.com/what-is-credit-portfolio-management.htm

[6] https://www.sba.gov/about-sba/organization. (last visited December 28, 2020).

[7] https://www.sba.gov/funding-programs/loans. (last visited December 28, 2020).

[8] See Joe Adler. Does Gov’t Help or Hurt Small-Biz Lending?,AMERICAN BANKER (January 14, 2011). https://advance-lexis-com.libproxy1.usc.edu/api/document?collection=news&id=urn:contentItem:51Y2-H2V1-JCRW-50GC-00000-00&context=1516831; Jeff Guo, Why was the recession so much worse for small businesses? Blame lending., WASHINGTON POST (November 26, 2014, 5:28 AM). Gale In Context: Global Issues. link.gale.com/apps/doc/A391654394/GIC?u=usocal_main&sid=GIC&xid=891b3b25.  Accessed December 29, 2020.

[9] https://www.consumerfinance.gov/about-us/the-bureau/ (last visited, December 28, 2020). 

[1] Bill Chappell. Wells Fargo Fined $!85 Million Over Creation of Fake Accounts For Bonuses. NPR (September 8, 2016). https://www.npr.org/sections/thetwo-way/2016/09/08/493130449/wells-fargo-to-pay-around-190-million-over-fake-accounts-that-sparked-bonuses.

[10] Bill Chappell. Wells Fargo Hit With $1 Billion in Fines Over Home and Auto Loan Abuses. NPR (April 20, 2018). https://www.npr.org/sections/thetwo-way/2018/04/20/604279604/wells-fargo-hit-with-1-billion-in-fines-over-consumer-abuses.

[11] Bill Chappell. Wells Fargo Hit With $1 Billion in Fines Over Home and Auto Loan Abuses. NPR (April 20, 2018). https://www.npr.org/sections/thetwo-way/2018/04/20/604279604/wells-fargo-hit-with-1-billion-in-fines-over-consumer-abuses.

[12] https://www.consumerfinance.gov/policy-compliance/rulemaking/small-business-review-panels/ (last visited December 28, 2020). 

[13] See fact sheet page made available on the CFPB website explaining the limitation in rule making ability of the agency regarding small businesses.  https://files.consumerfinance.gov/f/documents/201510_cfpb_fact-sheet-small-business-review-panel-process.pdf (last visited on December 28, 2020). 

[14] CFPB press release, Consumer Financial Protection Bureau Releases Outline of Proposals Under Consideration to Implement Small Business Lending Data Collection Requirements. https://www.consumerfinance.gov/about-us/newsroom/cfpb-releases-outline-proposals-implement-small-business-lending-data-collection-requirements/

[15] William E. Jackson, Louis Marino, Jefrey S. Naidoo, & Reginald Tucker. Size Matters: The Impact of Loan Size on Measures of Disparate Treatment toward Minority Entrepreneurs in the Small Firm Credit Market. 8 Entrepreneurship Research Journal, Issue 4 (July 17, 2018). 

[16] Id.

[17] Susan Coleman. Access to Capital and Terms of Credit: A Comparison of Men-and Women-Owned Small Businesses. 38 Journal of Small Business Management, 37-52 (July 2000).

[18] Id.

[19] Id.

[20] Congressman Emanuel Cleaver. REP. CLEAVER ANNOUNCES INITIAL FINDINGS OF SMALL BUSINESS FINTECH INVESTIGATION. US Fed News Service, Including US State News. (October 18, 2017) Retrieved from http://libproxy.usc.edu/login?url=https://www-proquest-com.libproxy2.usc.edu/docview/1952047267?accountid=14749.

[21] Id.

[22] Lydia DePillis. A Watchdog Grows Up: The Inside Story of the Consumer Financial Protection Bureau. THE WASHINGTON POST (January 11, 2014). https://www.washingtonpost.com/news/wonk/wp/2014/01/11/a-watchdog-grows-up-the-inside-story-of-the-consumer-financial-protection-bureau/

[23] Id.

[24] Id.

[25] Id.

[26] Id.

[27] Eric Levitz, Mick Mulvaney to Run Consumer Watchdog Agency He Hates, NEW YORK MAGAZINE, (November 16, 2017) https://nymag.com/intelligencer/2017/11/mick-mulvaney-to-run-consumer-watchdog-agency-he-hates.html.

[28] Jeff Sovern, Mick Mulvaney turned the CFPB from a forceful consumer watchdog into a do-nothing government cog, BUSINESS INSIDER, (July 8, 2018, 12:25 PM), https://www.businessinsider.com/mick-mulvaney-turned-the-cfpb-into-a-do-nothing-government-cog-2018-7

[29] Tucker Higgins, The head of the CFPB now believes that the financial regulator is unconstitutionally structured, CNBC (September 17, 2019, 6:05 PM), https://www.cnbc.com/2019/09/17/cfpb-head-tells-supreme-court-agency-is-unconstitutional.html

[30] For full text and more information regarding the CARES Act, see 116 P.L. 136, 2020 Enacted H.R. 748, 116 Enacted H.R. 748, 134 Stat. 281

[31] Additionally, the US Treasury website provides streamlined information regarding the CARES Act.  See https://home.treasury.gov/policy-issues/cares

[32] See Tory Newmyer, The Finance 202: Banks struggle with confusing rules on small business stimulus loans, THE WASHINGTON POST, (April 3, 2020, 6:01 AM), https://www.washingtonpost.com/news/powerpost/paloma/the-finance-202/2020/04/03/the-finance-202-banks-struggle-with-confusing-rules-on-small-business-stimulus-loans/5e8668db602ff10d49adbd23/; Richard Kerr, As CARES Act confusion reigns, small businesses lose, THE POINTS GUY, (April 10, 2020), https://thepointsguy.com/news/cares-act-confusion-small-businesses-lose/.

[33] Erica Werner, Jeff Stein, and Ranae Merle, Treasury’s Mnuchin seeks additional $250 billion to replenish small-business coronavirus program, THE WASHINGTON POST, (April 7, 2020, 2:42 PM). https://www.washingtonpost.com/us-policy/2020/04/07/treasury-coronavirus-small-business/.

Note About the Author:Scott Natsuhara is a second-year law student at USC Gould School of Law. Before law school, he worked at Bank of America and Banc of California for approximately five years. He served as a personal banker, small business banker, and a business development officer. In these roles, he primarily served small businesses and business banking clients. These experiences have allowed Scott to learn about the intricacies of business banking and become familiar with the regulation and compliance processes involved in small business lending.