Key Points
- The Consumer Financial Protection Bureau finalized controversial rules limiting overdraft fees and banning medical debt on credit reports.
- Republicans may use the Congressional Review Act to reverse these regulations.
- Industry groups have filed lawsuits against the new rules, citing financial impacts.
- GOP lawmakers face logistical and political challenges in overturning the rules.
As the Biden administration winds down, the United States Consumer Financial Protection Bureau (CFPB) has continued issuing controversial regulations under its director, Rohit Chopra, despite significant opposition from Congressional Republicans. In recent weeks, the CFPB finalized rules sharply limiting overdraft fees to $5, down from an average of $27 and barred the inclusion of medical debts on consumer credit reports. These measures, lauded by consumer advocates, have triggered lawsuits from financial industry groups and fierce criticism from GOP lawmakers.
Republicans have signaled they may attempt to overturn these rules using the Congressional Review Act (CRA), which allows Congress to nullify recently enacted regulations. If successful, the CRA could prohibit similar regulations in the future, though the law’s vague language on “substantially the same” rules leaves room for interpretation. Industry representatives have encouraged Republican lawmakers to use this tool, arguing that these last-minute regulations exemplify the need for such oversight.
The CFPB appears to be gambling that Republicans will hesitate to repeal popular consumer protection measures like those capping overdraft fees or shielding credit scores from medical debt. A CFPB insider expressed confidence that neither Congress nor the incoming administration would want to risk being seen as defending big banks and debt collectors over consumer interests.
Enacted in 1996, the CRA was rarely used until the Trump administration deployed it to roll back 16 Obama-era rules. The Biden administration aimed to avoid similar reversals by finalizing major regulations early, though Chopra has opted for a late-term burst of activity. His agency has also filed lawsuits against major banks, Zelle’s operator, and other high-profile firms.
Republicans, including Senate Banking Committee Chair Tim Scott, have criticized Chopra’s “midnight rulemaking,” accusing him of partisan overreach. While GOP lawmakers have not confirmed plans for repeals, logistical hurdles, and political considerations may limit their actions. For Chopra, the regulatory blitz represents a calculated effort to cement his legacy, even at the risk of provoking long-term challenges.
