House banking panel advances measures to nullify credit card, ESG rules

Ting Shen/Bloomberg

WASHINGTON — The House Financial Services Committee voted along party lines to pass Congressional Review Act resolutions that would void measures from the Consumer Financial Protection Bureau and other banking regulators, and passed a raft of other banking-related bills. 

The resolutions are unlikely to make it into law, as Republicans lack the numbers to overturn a veto from President Joe Biden. The votes do, however, represent an uptick in the number of attempts by Republicans in Congress to nullify the Biden administration's financial policies. 

Rep. Andy Barr, R-Ky., led the legislation to block the CFPB's rule capping credit card late fees at $8. It passed through the panel in a 28-22 vote, to immediate applause from the banking industry. 

"As we've long said, this politically-motivated rule will increase the costs of credit cards for the vast majority of consumers who pay their credit cards on time, and it will significantly impact the long-term financial health of American cardholders who frequently pay late," said Consumer Bankers Association President and CEO Lindsey Johnson in a statement. "By passing this resolution to stop the rule from taking effect, the Committee has demonstrated its commitment to protecting consumers who pay on time and retaining access to credit for low-income and underbanked families." 

Senate Banking Committee ranking member Tim Scott, R-S.C., introduced an identical bill in the Senate on April 8. Although it has 13 Republican co-sponsors, President Joe Biden's explicit support for the rule makes it unlikely that Scott's resolution will receive any bipartisan support. 

The CFPB rule also faces a lawsuit from the U.S .Chamber of Commerce and other banking groups, and the 5th Circuit — a favored venue for groups looking to overturn Biden administration rules — is currently weighing whether to issue an injunction on the rule. 

The other Congressional Review Act resolutions dealt with climate change in financial regulation. One focused on the climate change disclosure requirement rules from the Securities and Exchange Commission, which has become less relevant to banks since the agency removed its requirement that firms report carbon emissions down its supply chain. 

The other three targeted identical statements on climate-related financial risk management for large financial institutions from the Federal Reserve, Office of the Comptroller of the Currency and Federal Deposit Insurance Corp. 

Other measures that passed through the committee and now move to the full House include Rep. French Hill's, R-Ark., earned wage access bill, which would establish earned wage access products as a noncredit product, which Democratic objectors to the bill said would be harmful to consumers because those products would be exempt from the Truth in Lending Act. That also passed on a party-line vote, so it's also not likely to be picked up by the Senate. 

"Yet this matters as it offers insight into how a Republican CFPB director could view Earned Wage Access products that are offered independent of one's employer," said Cowen analyst Jaret Seiberg in a note. "In general, that would be accommodating to EWA offered independent of the employer." 

Two bills sponsored by Democratic lawmakers also passed the House. One, led by Rep. Brad Sherman, D-Calif., would prevent large banks with more than $100 billion in total assets from opting out of the requirement to recognize Accumulated Other Comprehensive Income (AOCI) in regulatory capital. 

The other, by Rep. Al Green, D-Texas, would codify some reporting requirements by bank regulators in the aftermath of bank failures.