WASHINGTON — Republicans in Congress advanced two Congressional Review Act resolutions that would nullify some of the biggest actions taken by the Consumer Financial Protection Bureau in the last months of the Biden administration.
The House Financial Services Committee voted 30 to 19 to
The CRA resolution now goes to the full House, then to the Senate. It's expected to pass with support along Republican party lines, and President Donald Trump is anticipated to sign it into law.
The panel's chairman, Rep. French Hill, R-Ark., is leading the resolution in the House. Sen. Tim Scott, R-S.C., is leading companion legislation in the Senate.
"By forcing banks to cut their fees, or to treat overdrafts as 'loans,' banks will limit the service, especially to low-income and low-credit customers," Hill said at the markup. "That would drive customers in a pinch towards alternative products — much more costly nonbank products."
Democratic lawmakers at the markup argued against the CRA resolution. Rep. Sean Casten, D-Ill., suggested that bankers' powers might be too broad in the marketplace for pricey overdraft fees to be considered fair.
"There's nothing wrong with businesses trying to make as much money as they can and charge as much revenue as they can," he said. "The question here is are the banks sufficiently powerful to be monopolistic."
The banking industry cheered the move, saying the overdraft rule relied on an overly broad interpretation of the Truth in Lending Act and would limit the availability of a service that people like.
"The Bureau's rule was flawed and unlawful from the start, and went against the wishes of a strong majority of Americans who have repeatedly indicated that they value and appreciate overdraft protection," said the American Bankers Association in a statement. "By demonizing these highly regulated and transparent bank fees and attempting to implement government price controls, the rule would make it significantly harder for banks to provide this valuable service."
Some lawmakers also raised concerns that the CRA process would, in effect, bar the bureau under future administrations from pursuing an overdraft rule, and said that more tailored legislation would be the better avenue.
"Let's not mistake ourselves about who is being protected here. Our families suffer while the biggest banks benefit," said Rep. Sam Liccardo, D-Calif. This is not the right approach. If we think there's something wrong with this rule, let's change it through statute."
Rep. Hill responded to Liccardo's concerns by arguing that the CFPB used the Truth in Lending Act to back-up the overdraft rule, which Hill said was overstepping the bounds of that statute, which makes the CRA route the appropriate one in his eyes.
"If the CFPB wants to suddenly subject overdraft to truth in lending, they should approach Congress and ask for that authority because that's not the authority that's been given by Congress," Hill said.
The possibility of the inability for the CFPB to pursue an overdraft rule in the future could be significant, said TD Cowen analyst Jaret Seiberg in a note.
"It seems likely to us that industry would have a strong legal argument if a Democratic-run CFPB tried to impose a dollar limit on overdraft fees," he said. "At a minimum, it will make it harder to regulate overdraft fees in the future."
Around the same time, the full Senate considered a CRA resolution on the CFPB's
"This is an opportunity for us to ease the regulatory burden the previous administration placed on the American people," Ricketts said on the Senate floor. "That's what President Trump was elected to do. Now, we're helping him deliver on his campaign promises."
The resolution passed the Senate in a 51 to 47 vote, largely along party lines, with Sen. Josh Hawley, R-Mo., voting alongside Democratic lawmakers.
Sen. Elizabeth Warren, D-Mass., the ranking member of the Senate Banking Committee, said in a Senate floor speech ahead of the vote that nullifying the rule would benefit wealthy business owners like billionaire Elon Musk, whose actions related to the newly formed Department of Government Efficiency has, at the minimum, played a role in dismantling the bureau.
Warren has repeatedly sought to
"The only people who want weaker rules against scamming are the guys who run the scams," Warren said. "And that may explain why Elon Musk is hoping that the Senate kills this new rule today, because Elon's new X money digital payment platform would be subject to CFPB review."
This CRA resolution could have a more limited impact than the overdraft measure, Seiberg said in a note.
"Voiding the rule only means the CFPB cannot send supervisors into the nonbanks on a regular basis to ensure compliance with the law," he said. "It does not change the requirement for nonbanks to follow the law. And the CFPB and state regulators retain the ability to bring enforcement actions and to open investigations against nonbank payment companies that are suspected of violating the law."
