President Trump signed two congressional rollbacks of Biden-era rules from the Consumer Financial Protection Bureau (CFPB) that sought to cap overdraft fees and ramp up oversight of digital wallets.
The two rules were finalized in the last few months of the Biden administration, leaving them vulnerable to the lookback provision of the Congressional Review Act (CRA).
The CRA allows Congress to overturn regulations put forward by federal agencies, including those finalized near the end of the previous session during the so-called lookback period.
The overdraft rule, finalized in December, sought to limit overdraft fees charged by banks and credit unions to $5 or the amount required to cover their costs and losses. It was long opposed by the banking industry and Republicans.
“The Biden administration’s ill-conceived rule imposing new price controls on overdraft services provided by banks and credit unions harmed the very consumers the CFPB is supposed to protect,” Senate Banking Chair Tim Scott (R-S.C.) said in a statement.
“The rule would have reduced access to credit and important financial services and resulted in more unbanked Americans,” he continued. “That’s why I led the effort in Congress to overturn the rule, and I’m grateful for President Trump’s support to eliminate this misguided rule once and for all.”
The other rule targeted by Congress brought large companies offering digital wallets and payment apps under the CFPB’s supervision. This was set to include the likes of Apple, Google, Amazon, PayPal, Block and Venmo, according to CNBC.
The Financial Technology Association, which represents the industry, called Friday’s rollback a “decisive victory for American consumers, small businesses, and financial innovation.”
“We applaud President Trump for taking action against regulatory overreach and protecting the future of U.S. competitiveness,” Penny Lee, president and CEO of the trade association, said in a statement. “This action stops a harmful rule that would have raised costs, limited choice, and stifled innovation in digital payments.”
House Financial Services Chair French Hill (R-Ark.) slammed both rules, which he said were “rushed out the door in the darkness of night in the waning hours of the Biden-Harris Administration and are perfect examples of undemocratic and unjustified actions.”
“Americans voted for consumer choice, not government overregulation,” Hill continued in a statement. “By overturning these two rulemakings, we are returning decision-making power where it belongs: with the American people.”
The CFPB’s future has appeared increasingly uncertain under the Trump administration. Acting director Russell Vought has shut down the consumer watchdog’s headquarters, directed staff to halt work and attempted to lay off hundreds of employees.
The National Treasury Employees Union sued Vought in February, accusing him of attempting to effectively dismantle the agency. A federal judge temporarily blocked the administration from conducting mass layoffs, but her order was scaled back by an appeals court panel.
The Trump administration construed the decision as greenlighting its major cuts and moved forward with plans to lay off roughly 90 percent of the CFPB last month. However, the move was blocked by both the district judge and the appeals court panel, which walked back part of its original order.
Meanwhile, Vought has taken more actions to shake up the agency, withdrawing nearly 70 policy statements, interpretive rules, advisory opinions and guidance issued by the consumer watchdog since its establishment in 2011.
Vought’s tenure of the CFPB appears poised to continue, as Trump plans to drop his nomination of Jonathan McKernan to lead the agency and instead tap him for a Treasury Department post, according to The New York Times.
