Overview
Title
To impose additional requirements for covered agencies in regulatory flexibility analysis.
ELI5 AI
H.R. 1606 is a bill that wants to make sure that when some rules are made by the government, they pay extra attention to how small businesses are affected and explain why they didn't choose options that could help these small businesses more.
Summary AI
H.R. 1606 is a bill designed to add extra steps for certain government agencies when they conduct regulatory flexibility analyses by focusing on the impact of rules on small entities. It requires that if an agency chooses not to adopt suggested alternatives that could help small businesses, the agency must provide a detailed justification explaining why the size and resources of small businesses should not influence the rule. The bill also amends current law to ensure that when agencies issue final rules, they must describe efforts to minimize costs for small entities and justify why alternatives weren't adopted. This measure seeks to hold agencies accountable under the Dodd-Frank Wall Street Reform and Consumer Protection Act, particularly in considering small business impacts.
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AnalysisAI
General Summary of the Bill
The bill titled "Making the CFPB Accountable to Small Businesses Act of 2025" aims to introduce additional requirements for covered agencies when conducting regulatory flexibility analyses. This legislative proposal seeks to modify existing rules under the Dodd-Frank Wall Street Reform and Consumer Protection Act. It emphasizes the importance of considering the impact of proposed rules on small businesses and demands greater accountability from agencies in justifying their regulatory decisions.
Summary of Significant Issues
A key concern highlighted by the bill relates to agency accountability. It mandates that covered agencies must offer detailed justifications when they decide not to adopt alternatives that could potentially benefit small entities. This requirement is aimed at ensuring that small businesses receive fair consideration during the regulatory process.
However, the bill's requirement for "detailed justification" is somewhat vague. Terms like "factual, policy, and legal reasons" lack precise definitions, which can lead to varying interpretations by different agencies. This ambiguity could result in inconsistent application, complicating the regulatory landscape and possibly creating administrative burdens for the agencies involved.
Public Impact
For the general public, particularly those who rely on the financial sector's stability and fairness, the bill could mean more meticulous regulatory oversight with a focus on protecting small businesses. This could, in theory, foster an economic environment that is more conducive to small business growth and stability, which in turn could benefit the broader economy through job creation and innovation.
On the downside, if the processes become overly complex due to ambiguity in the bill's language, there could be delays in implementing necessary financial regulations. Such delays might hinder timely responses to financial market issues and potentially impact consumer protection measures covered under the Dodd-Frank Act.
Stakeholder Impact
For Small Businesses: The bill appears to be a positive development, as it prioritizes the impact of new rules on these entities. By ensuring that their interests are thoroughly considered, small businesses might experience a regulatory environment that better supports their growth and sustainability.
For Covered Agencies: While the bill intends to enhance accountability, the unclear requirements may lead to additional administrative burdens. Agencies might struggle with the need to provide extensive justifications without clear criteria, potentially requiring additional resources and time to fulfill these obligations.
For Legal and Financial Advisors: The introduction of new requirements and potential ambiguities could increase the demand for legal and regulatory expertise. These professionals could be called upon to navigate the complexities and ensure that both small businesses and agencies comply with the new regulations effectively.
To conclude, while the bill aims to support small businesses through increased accountability and careful consideration of regulations, its ultimate impact will depend on how its provisions are interpreted and implemented. As with any legislative framework, the devil is in the details, and successful implementation will hinge on clear guidelines and consistent application across different governmental agencies.
Issues
The requirement in Section 4 for a covered agency to provide a 'detailed justification' when not adopting significant alternatives for small entities raises concerns about clarity and potential administrative burden. It is not specified what constitutes sufficient 'factual, policy, and legal reasons,' which could lead to inconsistent interpretations and application among agencies, impacting regulatory consistency and effectiveness.
Section 3 introduces a requirement for agencies to justify when they choose not to adopt any alternatives described in regulatory flexibility analysis for small entities. This requirement could be considered vague and place a significant burden on agencies to provide comprehensive explanations without clear criteria, which could lead to implementation challenges and increased scrutiny from small businesses and legal entities.
The changes described in Section 2 regarding the inclusion of the impact of proposed rules on small entities enhance accountability but may lead to increased complexity for compliance. Agencies must now consider Section 609 of title 5, United States Code, which could complicate the rulemaking process and prolong the time required for regulatory approvals, thereby affecting the prompt implementation of financial regulations under the Dodd-Frank Act.
Section 1, being the short title, does not introduce substantial content or regulatory requirements but frames the legislative intent. Its impact is limited as it simply names the Act without shaping or altering any specific legal or financial implications.
Sections
Sections are presented as they are annotated in the original legislative text. Any missing headers, numbers, or non-consecutive order is due to the original text.
1. Short title Read Opens in new tab
Summary AI
The section outlines the short title of the Act, officially calling it the “Making the CFPB Accountable to Small Businesses Act of 2025”.
2. Rulemaking under Dodd-Frank Wall Street Reform and Consumer Protection Act Read Opens in new tab
Summary AI
The Dodd-Frank Wall Street Reform and Consumer Protection Act has been changed to include a new requirement for considering how new rules might affect small businesses.
3. Initial regulatory flexibility analysis Read Opens in new tab
Summary AI
The section amends a part of the United States Code by changing the wording and adding a new requirement. It states that if a government agency decides not to use certain alternative options, it must provide a detailed explanation of why the size and resources of small businesses do not affect the new rule.
4. Final regulatory flexibility analysis Read Opens in new tab
Summary AI
The section updates how an agency must explain its efforts to reduce extra credit costs for small businesses. If no better options for small businesses are chosen, the agency has to clearly justify why the size and resources of these businesses don’t affect the decision, backed by facts, policies, and legal reasons.