Weve been given an opportunity to undo regulatory damage
By Sen. David Perdue & Cong. Roger Williams
Before the Obama Administration turned over the keys to President Donald Trump agency regulators used and abused their rulemaking authority to dole out hundreds of new federal government rules. So it wasnt surprising when a rogue government agency spawned from the 2300-page Dodd-Frank Act
followed suit.
Last October
the Consumer Financial Protection Bureau or CFPB issued its 1689-page Prepaid Card Rule. It is a sweeping rule that would upend an entire sector of our economy stifle innovation and deprive consumers of access to credit.
Through the Congressional Review Act weve led the charge against this rule in the House and Senate. The regulators have noticed. Last week the CFPB caved and threw a Hail Mary announcing a delay in the implementation timeline.
For consumers and businesses alike this is welcome news but we cant stop fighting to prevent it from ever coming to pass.
The 1689-page Prepaid Card Rule is billed as a consumer protection measure branded with the tagline Know Before You Owe." While that may be a catchy tagline it is nothing more than a
smokescreen for federal overreach.
Many businesses including mobile payment apps pushed back on the CFPB. Due to the diverse array of financial products that would be affected by this rule their concerns varied but each business cited the real impact this rule would have on innovation.
We have already seen shortsighted and overreaching regulations cripple community banks and credit unions. If the Prepaid Card Rule comes to pass similar effects will happen to alternative financial services. Just as the former hinders small businesses ability to access credit the latter will stifle
innovation in a budding sector of our economy.
Even more concerning are the consequences for consumers.
The more the rule has been studied the higher compliance estimates have grown. Its now estimated that the Prepaid Card Rule would cost hundreds of millions of dollars.
This added expense would force prepaid card companies to exit the marketplace or pass down these costs to consumers many of whom cannot afford to participate in our traditional banking system.
Due to rising checking account fees and minimum balance requirements some 68 million Americans have turned to prepaid cards and accounts to manage their day-to-day financial needs. These consumers who simply want to manage their finances at a low-cost rate cannot afford a sweeping new
rule that would impose higher costs.
Ultimately the Prepaid Card Rule is just another example of a rule that hurts the very people it intends to protect.
Fortunately weve been given a moment of opportunity to undo regulatory damage and in this case prevent it altogether. The Congressional Review Act (CRA) is a wonky term for a potent tool to protect American consumers from federal overreach.
Multiple CRAs have already been signed by Trump rolling back Obama-era regulations and protecting Constitutional rights. We are using the CRA concurrently in the House and Senate to push for an end to
the Prepaid Card Rule before it can even begin to harm consumers.
The CFPBs desperate delay is a sign that our efforts are working but we will not be deterred from intervening to ensure this sweeping rule does not disrupt a growing key sector of our economy.
Legitimate oversight over the financial sector is important but when measures that could hurt up to 20 of Americans are unveiled by an agency that itself has no oversight it is the responsibility of Congress to rein in any power grab.
Senator David Perdue (R-GA) is on the Senate Banking Committee and introduced the Prepaid Card Rule CRA. Congressman Roger Williams (R-TX) is on the Financial Services Committee.
