A law allowing Congress to nullify executive agency regulations could play a role in the incoming Trump administration's push to undo the Biden-era financial regulatory initiatives, though litigation and new rulemaking will also play a significant role.
Jon Skladany, partner at Jenner & Block, says the current political conditions are optimal for the incoming Congress to utilize the Congressional Review Act, a 1996 law that allows Congress to overturn recently passed agency rules.
"Republicans control both chambers of Congress, which gives them the power to pass CRA resolutions on a partisan basis by a simple majority vote," he said. "A Republican in the White House means those CRA resolutions — which will target rules issued by the previous Democratic administration — are unlikely to be vetoed."
The CRA requires all final agency rulemaking to be submitted to Congress and published in the Federal Register, after which the legislative branch has various deadlines within which it can review and potentially block rules. There is a 60-calendar-day "introduction period," during which lawmakers can propose a joint resolution of disapproval to nullify a rule, as well as a 20-calendar-day "discharge period," when 30 senators can sign a petition to force a Senate committee to release the resolution for further action. The Senate also has a 60-Senate-session-day "action period," within which it can bring a joint resolution to a vote with 51 votes, as opposed to the 60 votes needed to end debate on a bill or nomination, so it can move to a final vote.
Since its inception, the CRA has been invoked to overturn 20 administrative rulemakings, with a majority under the first Trump administration. Under President George W. Bush, the CRA was used just once, while during the president-elect's last term 16 rules were repealed. The Biden administration oversaw three CRA disapprovals during the 117th Congress, though the president vetoed several more joint resolutions.
Crucially, the CRA also has a look-back mechanism that extends review periods for rules submitted fewer than 60 Senate session days or 60 House legislative days before Congress adjourns. Such rules are treated as if submitted on the first day of the next session, effectively resetting the clock for review.
The Congressional Research Service
Alexandra Barrage, a partner at Troutman Pepper Locke, said the CRA will likely not be a primary tool for regulatory rollbacks because many of the same rules that the incoming administration is most opposed to are already being fought in court.
"The CRA is important to all, but it's certainly not the only tool that the industry is using on some of these rulemakings," she said. "In this world, the litigation that we've already seen across multiple rules is really where so much of the action currently is."
The CRA's look-back tool could be particularly effective, however, against recent Consumer Financial Protection Bureau regulations, including rules on
By contrast, there has been much less activity on the prudential regulatory front in the final months of 2024. Legal experts suggest that only a few bank regulations are at risk of being targeted, with one notable exception being the Office of the Comptroller of the Currency's final
Skladany says presidential administrations are increasingly mindful of the need to issue rules well before the look-back period.
"Because the CRA is no longer dormant, administrations of both parties are intentional about issuing rules in advance of the look-back period, and that was certainly the case for the Biden administration in 2024," he said. "The reality is that there are not many rules issued by the prudential banking regulators that are obvious targets for the CRA."
Barrage notes that the OCC's bank merger application standards — unlike the FDIC's, which are technically a statement of policy — constitute a final rule, and thus could be subject to the CRA.
"I think that's the only [major prudential] rule that would be CRA-able," she said. "Whereas guidance can be pulled back by the agency [under the next administration]."
Skladany said using the CRA is complicated by political factors as well. Because some of the CRA-eligible rules have support from the industry or appeal to the populist faction of the Republican base, Congress would likely prefer not to vote on repealing those measures.
"The CFPB's rule on overdraft credit is a good example," he said. "Because Vice President-elect JD Vance and other influential Trump Administration figures have aligned themselves with popular policies like banning 'junk fees' and lowering credit card fees, Republicans in Congress may prefer to allow the litigation to play out instead of using the CRA to undo a policy that is popular with voters."
The banking industry
Another complicating factor with the CRA is that when a resolution is passed to cancel an agency rule, it also blocks the agency from creating a new rule that's substantially similar to the one that was overturned.
In that respect, Skladany says, "the CRA provides certainty for financial institutions and regulated entities when it is used successfully — the FDIC and OCC will not be able to re-issue similar rules." Banks should not count on such certainty, however, he added.
"Until such time, there is a great deal of uncertainty surrounding rules published in the final months of an outgoing administration," he said. "Leaders at firms covered by those rules have to prepare for the possibility that the rule will remain in effect."
Absent legal and legislative challenges, Ian Katz of Capital Alpha Partners says he expects agency heads to spearhead rollbacks. Even absent formal challenges, many of the guidance and non-yet-final rules put out under Biden's administration could also be rolled back less conspicuously under the new agency leadership.
"Many rules and proposals issued by Biden's regulators are anathema to Republicans so we think the next agency heads will indeed spend a good chunk of time erasing what has been done the last few years," he wrote in a note. "Some rules are already facing court challenges and could be vacated before Trump's regulators get around to killing them."
