The CFPB is facing pushback from the U.S. Senate over two final rules issued under the Biden administration: one expanding oversight of nonbank digital payment providers and another limiting the reporting of medical debt. Both efforts invoke the Congressional Review Act (CRA), a legislative mechanism that allows Congress to roll back recently finalized federal regulations.
The CRA gives Congress the authority to nullify federal agency rules within 60 legislative days of their finalization. To successfully repeal a rule, both the Senate and the House must pass a joint resolution of disapproval, which then requires the President's signature. If a rule is repealed under the CRA, the agency is prohibited from issuing a substantially similar regulation unless Congress explicitly authorizes it.
On March 5, the U.S. Senate voted to repeal the CFPB's nonbank digital payment supervision rule, which expands the agency's supervisory authority over large nonbank payment providers.Under the rule (previously discussed here), a nonbank covered person is subject to the Bureau's supervisory authority if it conducts more than 50 million consumer payment transactions annually.This definition classifies certain large nonbank entities as "larger participants" in the consumer financial market, making them subject to CFPB examinations and reporting requirements.
On March 11, Republican lawmakers introduced a separate resolution to overturn the CFPB's medical debt reporting rule (previously discussed here), which requires consumer reporting agencies to remove all medical debt data from credit reports, preventing lenders from considering unpaid medical bills when evaluating credit applications. The rule has faced legal challenges since its inception (discussed here and here).The resolution is still pending in the Senate and has not yet been voted on.
Putting It Into Practice: The recent actions to challenge CFPB rules using the CRA reflect a broader trend of increased scrutiny over regulatory measures enacted toward the end of the Biden Administration. Given the excessive amount of rulemaking of the Chopra Administration, we expect more CRA challenges to agency rulemaking. Financial institutions should anticipate continued congressional oversight and potential rollbacks of tail-end Biden-era regulations, specifically those perceived as overly burdensome.
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