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The Senate has voted 51-47 in favour of overturning the Consumer Financial Protection Bureau's (CFPB’s) rule relating to "Defining Larger Participants of a Market for General-Use Digital Consumer Payment Applications", in what can be seen as a victory for the Trump administration and an attempt to undermine consumer protection in the US.
The decision is the first example of Congress attempting to use the authority of the Congressional Review Act (CRA) to overturn a CFPB rule from the Biden era.
This was the first attempt at utilising the CRA by the administration and can be viewed as something of a litmus test for future CFPB rules, including the overdraft rule and the medical debt rule, which also face widespread opposition.
It appeared in the Senate shortly after Senator Pete Ricketts (R-NE) and Representative Mike Flood (R-NE-01) brought the rule to Congress on February 27.
It will now move on to the House of Representatives for a second vote before it can be struck from the record entirely, as per the stipulations of the CRA and US congressional practice.
A source close to the White House told Vixio that this rule was likely first because “they felt like they had the votes” to ensure it would be struck down, and this result has proven that to be the case.
It is unclear if the motion will pass the House too, but it is likely given the ease at which it cleared the Senate.
The first of many?
The Financial Technology Association (FTA) was among those to praise the Senate for passing the resolution to overturn the larger participant rule for digital consumer payments.
“We thank senator Pete Ricketts and congressman Mike Flood for leading this bicameral effort to overturn the CFPB’s harmful and overreaching rule,” said Penny Lee, president and CEO of the Financial Technology Association.
“Digital payment companies are regulated at the state and federal levels. Layering additional regulation simply for the sake of regulation is duplicative and burdensome and would result in increased costs for consumers and small businesses.”
Lee added that this rule failed to identify risks to consumers that existing regulation does not already mitigate, failed to define a market, and conflated diverse uses and products into a one-size-fits-all approach.
“We should be focused on how the US remains competitive, not on hindering innovation.”
The opposition to this rule has some bipartisan support, which is perhaps why it was chosen as the first CFPB rule to be voted on.
“There are a number of Democrats that actually wrote a letter to the CFPB on this during the comment period last year,” the White House insider said.
“They didn't oppose the rule, but they expressed reservations and suggested that they could perhaps vote for the CRA resolution. Picking another rule to use as a litmus test may have led some Democrats to question if this was simply a vote against the CFPB and not the actual rule.”
This vote may also create some momentum in the fight to overturn CFPB rules and eventually eliminate the Bureau itself.
“I hope that this creates momentum for some other CRA resolutions like the overdraft rule, which is being voted on by the Financial Services Committee this week,” they added.
“Maybe this vote will create some momentum to keep going and overturn more rules.”
