Bloomberg News
WASHINGTON — The House voted in favor of the Congressional Review Act resolutions to nullify the Consumer Financial Protection Bureau’s
The House voted 217-211 on Wednesday afternoon to overturn the overdraft rule, which would have capped overdraft fees at the largest banks at $5. The larger participant nullification vote passed by a tally of 219 to 211.
Both resolutions were already passed
The CRA resolutions not only nullify the final rules, but prevent the CFPB from pursuing a materially similar rulemaking in the future, thus undercutting the bureau’s ability to both set limits for overdraft and to oversee nonbank financial companies.
House Financial Services Committee Chair French Hill, R-Ark., led the House effort, while Senate Banking Committee Chair Tim Scott, R-S.C., led the CRA resolution on overdraft in the Senate.
“The CFPB rule imposes a government price gap on what financial institutions may charge in the way of a fee for an overdraft privilege, and like all price caps, this would reduce the availability of these very overdraft services,” Hill said in arguments on the House floor. “Like all price caps, this would reduce the availability of these very overdraft services, especially … for consumers who have lower credit scores or considered higher risk. By doing so, it effectively limits access to credit for those who need it the most at the time they need it the most.”
Democratic lawmakers opposed the legislative effort to nullify the CFPB rules. House Financial Services Committee ranking member Maxine Waters, D-Calif., led arguments for party.
“Let me be clearer, a vote for this bill is a vote for big banks,” Waters argued on the floor. “A vote for this bill is a vote for big fees, and a vote for this bill is a vote against your constituents.”
Rep. Mike Flood, R-Neb., and Sen. Pete Ricketts, R-Neb., sponsored the CRA resolution on the larger participant rule.
“By designating companies engaged in payments activities as larger participants, the bureau will get to expand their examination authority over an amorphous and ill-defined group of firms with payments tools,” Flood said in arguments on the House floor before the vote.
Waters said that the CRA resolution will “shield Elon Musk’s X app, which will soon get into the payments business, from supervision and oversight by the CFPB.
“This rule was necessary because big tech and other nonbank firms have increasingly offered mobile wallets and payment apps for consumers to use while the same consumer protection laws that apply to the banks do not apply to these big, big, big tech firms,” Waters said.
Banking groups immediately applauded the overdraft rule CRA vote, but did not address the larger participant rule.
“Both Chambers of Congress voting to overturn this onerous rule marks a significant victory for millions of Americans — especially the one in five without access to credit — who rely on overdraft services to pay for essentials and cover emergency expenses,” said the Consumer Bankers Association in a statement.
The Independent Community Bankers of America said that the overdraft rule exceeded the bureau’s statutory authority under the Truth in Lending Act, which the CFPB rule would make overdrafts subject to.
“Community banks provide a wide range of products and services in a competitive marketplace that customers may select to address situations in which they’ve overdrawn their account, including overdraft programs, free ad hoc solutions, alerts about their account status, account transfers, and more,” the group said. “The CFPB rule’s restrictions would have a negative ripple effect on customers and businesses that rely on overdraft services.”
Consumer groups decried the vote.
“Congress just made America more expensive for anyone struggling to make ends meet,” said Adam Rust, director of financial services at the Consumer Federation of America. “Partisanship has come before common sense. Unfortunately, a CRA is as blunt as it is long-lasting, so today’s narrow vote secures enduring profits for big banks’ overdraft franchises by making permanent their unfettered privilege to charge burdensome junk overdraft fees.”