Trump signs CRAs for overdraft, larger participant rules

WASHINGTON —  President Donald Trump signed the Republican-led Congressional Review Act resolution that overturns the Consumer Financial Protection Bureau rule that would have limited many overdraft fees. 

The CFPB’s rule would have capped overdraft fees at $5 for banks and credit unions with more than $10 billion in assets. The CRA resolution, now signed into law, prohibits that rule from going into effect and prevents the bureau from pursuing a significantly similar rule in the future. The overdraft rule would have gone into effect in October. 

“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,” said Senate Banking Committee Chair Tim Scott, R-S.C., in a statement. “The rule would have reduced access to credit and important financial services and resulted in more unbanked Americans.” 

Scott introduced the resolution to nullify the overdraft rule in the Senate. 

The rule was opposed by bankers, who applauded the final step in overturning it and other steps by the Trump administration to roll back many CFPB rules issued under former director Rohit Chopra, many of which bankers believed overstepped the bureau’s authority. 

“It is our hope this important step marks the beginning of a broader effort to reset the CFPB and reform the agency into a credible, durable regulator that consumers deserve,” said Consumer Bankers Association President and CEO Lindsey Johnson in a statement. “We stand ready to work with the Trump Administration to enact commonsense reforms to the CFPB, cut bureaucratic red tape, and unleash innovation that will benefit all Americans for decades to come.”

Even community bankers whose institutions have less than $10 billion of assets — thus exempting them from the rule — opposed it. 

“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,” said the Independent Community Bankers of America in a statement. “The CFPB rule’s restrictions would have a negative ripple effect on customers and businesses that rely on overdraft services.” 

At the same time, Trump signed a separate CRA resolution for the CFPB’s larger participant rule, which would have let the bureau’s examiners determine whether digital payment providers that process at least 50 million transactions each year comply with the Electronic Fund Transfer Act, as well as other consumer protection laws. 

“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,” said House Financial Services Committee Chairman French Hill, R-Ark., said in a statement. “The rule would have reduced access to credit and important financial services and resulted in more unbanked Americans.” 

The CFPB’s rule likely would have captured payment giants like Apple, Google, PayPal and others, and while CFPB has said it has always had enforcement authority over large payments companies and the rule will allow the bureau to conduct proactive examinations to make sure that the companies are complying with the law.

Under the Trump administration, the CFPB has rolled back other oversight of large tech firms, including considering eliminating a nonbank registry intended to track nonbanks that violated court orders or consumer protection laws. In its release, the CFPB also said “it will not prioritize enforcement or supervision” of the nonbank registry or against firms that do not meet upcoming compliance deadlines.