President Trump has signed a resolution nullifying the rule implementing the CFPB's power to supervise large nonbank financial services providers of general-use digital consumer payment applications.
Trump signed the resolution under the Congressional Review Act, which grants Congress and the President the power to nullify agency rules. The resolution passed the House and Senate before being sent to Trump. The Biden Administration issued the final rule in its closing days; as a result, the Trump Administration termed it a "midnight" rule.
The rule was based on the CFPB's authority to supervise a nonbank entity considered to be "a larger participant of a market for other consumer financial products or services." It would have covered providers of consumer financial products and services that are commonly referred to as "digital wallets," "payment apps," "funds transfer apps," and "person-to-person or P2P payment apps."
The rule would have covered firms that facilitated more than 50 million consumer transactions each year. The bureau estimated that would have covered seven nonbanks and that it that would have included more than 13 billion transactions each year.
The firms covered by the rule would have included some of the country's largest technology companies, since they are the largest providers of such services in the market. The supervisory authority the rule would have granted would have been similar to the supervisory authority the bureau has over large banks and credit unions.
Congressional Republicans who sponsored the CRA resolution said they were pleased with Trump's decision to sign it. "Following their election loss, the Biden-Harris CFPB rushed an eleventh-hour rule to attack non-bank digital consumer payment applications," said Sen. Pete Ricketts., R-Neb. He continued, "These are widely popular applications among consumers. President Trump is continuing to pass common sense measures by reversing this Biden-era rule."
However, as Congress was considering the resolution, consumer advocates emphasized that they believe the rule was sorely needed.
"If Congress reverses the payment app rule, it will put non-bank payment apps in a regulatory blind spot where their actions go unsupervised and consumers are left with no recourse except to complain to a chatbot," said Adam Rust, director of financial services for the Consumer Federation of America.
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