WASHINGTON — The Consumer Financial Protection Bureau's prepaid card rule appears to have survived Republican efforts to reject it using an obscure legislative process that has allowed the GOP to roll back more than a dozen Obama-era regulations.
Sen. David Perdue, R-Ga., and Rep. Roger Williams, R-Tex., both introduced legislation earlier this year that would allow Congress to use the Congressional Review Act to scrap the rule with only 51 votes in the Senate. However, a Senate vote on the legislation is unlikely ahead of a statutory deadline this week for Congress to act.
Perdue acknowledged that fact on Tuesday, issuing a conciliatory statement while also pointing to the CFPB’s intent to change the rule to address concerns expressed by mobile wallet companies.
“The CFPB should have scrapped this rule altogether, but we were able to extract significant concessions to narrow its scope,” Perdue said.
The prepaid card rule has received mixed reviews from the financial services industry, with some providers believing the rule would bring more legitimacy to the market and others voicing concern that it would stifle innovation.
The two GOP lawmakers said the rule was an example of regulatory overreach, while consumer groups accused the lawmakers of shilling for Georgia-based Netspend, one of the largest prepaid card providers, which would no longer be able to offer a profitable overdraft product once the rule took effect.
In the end, it appears Congress didn’t have the appetite to reject the regulation. A Senate Republican staffer said that was partly attributable to an extensive ad campaign by progressive groups.
The Congressional Review Act is a blunt and far-reaching instrument. If Congress had scrapped the rule, it would have prevented the CFPB from ever promulgating a similar regulation for prepaid cards. The statutory power to eliminate regulations also has a limited shelf life, with lawmakers only having 60 legislative days after it is notified of a regulation to utilize the process. That clock will hit zero this week for the prepaid card rule, according to Pillsbury Winthrop Shaw Pittman, which has been tracking Congressional Review Act legislation.
Sen. Mitch McConnell, R-Ky., could have brought the legislation directly to the floor earlier in the session, but with such time limited and lawmakers facing a multitude of other priorities, consumer groups helped to effectively run out the congressional clock.
However, Perdue warned the CFPB on Tuesday that he would be willing to use the review act if the agency were to promulgate other controversial rules.
“The Congressional Review Act process was an important tool to inject some oversight of this rogue agency," he said, "and something we will utilize again to rein in future overreaching rules."