A flurry of recent actions by the Consumer Financial Protection Bureau has left Republicans seething about “midnight rulemakings” and businesses fuming about politically driven lawsuits. But rolling back CFPB Director Rohit Chopra’s ambitious agenda may be an uphill climb even under unified GOP control of the government, your MM host reports this morning. There is some low-hanging fruit: On Day One, the incoming administration can strike out the kind of informal guidance that has become the “hallmark of the Chopra era,” one financial services lawyer told MM. That includes interpretive rules cracking down on Buy Now, Pay Later, Earned Wage Access and digital payments products. But official rulemaking will be much harder to contend with. GOP lawmakers and the Trump administration will have a few options to reverse Chopra-era regulations: overturning them through the Congressional Review Act; proposing new rules to amend or repeal previous ones; or refusing to defend them from legal challenges. Each is easier said than done. Any rules issued since mid-August fall within the CRA lookback window that allows lawmakers to introduce resolutions to overturn a regulation. The CFPB has issued four major final rules since then: one capping overdraft fees banks can charge; one subjecting nonbanks with digital payment platforms to greater scrutiny; one giving consumers greater access to their financial data; and another barring the inclusion of medical debt on credit reports. Republican lawmakers are now considering which regulations would be good candidates for CRA, according to staff. “[Senate Banking] Chairman [Tim] Scott is in close contact with [House Financial Services] Chairman [French] Hill to ensure both committees are prioritizing overturning the Biden administration’s rules that will do the most harm to consumers,” a Scott spokesman told MM. “The committee leaders will be working with their colleagues to advance measures in tandem to protect Americans’ access to credit and important financial services.” Hill last week railed against Chopra’s “eleventh-hour effort to appease the White House” after the bureau finalized the medical debt rule. Scott had exhorted Chopra to stop the actions at a December hearing, saying the CFPB appeared to be ignoring his call for financial regulators to suspend any rulemaking. The CRA is the most comprehensive way to nullify a rule — the procedure both invalidates the current regulation and precludes future administrations from introducing “substantially similar” proposals. But it would mean lawmakers would have to go on record appearing to support larger overdraft fees or to protect politically unpopular medical debt – and Republicans have little room to maneuver with a razor-thin House majority. It would also be difficult to summon the votes to “delete CFPB,” as Elon Musk urged in November, or otherwise overhaul its structure. “I’m not sure ‘anti-consumer protection’ is a tagline that at least some of the moderates want to bring home to their constituents,” said Eamonn Moran, a Holland & Knight attorney who previously served as counsel in the CFPB’s office of regulations. Democrats, for their part, are determined to protect the CFPB. Sen. Elizabeth Warren, who conceived of and helped set up the bureau, appealed to Trump’s populist instincts in pitching the bureau as an asset to the new administration. “If President-elect Trump is serious about lowering costs like he says, then he should embrace the CFPB, which has saved Americans more than $20 billion and is protecting Americans of all political stripes from discrimination by big banks,” Warren told MM. “This is a real test for the incoming administration and congressional Republicans – will they follow through on their promise to stand for working families, or was it all just talk?” she said. Further clouding the CRA picture, there’s simply not enough floor time in the Senate to overturn every regulation Republicans have a problem with, given the busy agenda before the new Congress. The Trump administration itself can move to undo rules, but the process is onerous and time-consuming. The CFPB would have to propose a new rule to repeal or amend an old rule, with the notice-and-comment requirements that come with formal rulemaking. Officials would then have to fashion a regulation that could withstand judicial scrutiny. The third option is litigation. “The CFPB could decide not to defend a rule, they could consent to an injunction being issued – that might be another way for them to go, but it would depend on some third party coming in to challenge the final regulation,” said Alan Kaplinsky, former chair of the consumer financial services group at Ballard Spahr. Banks have sued to stop the overdraft fee rule and the open banking rule, as well as an earlier one capping credit card late fees, and a trade group representing credit reporting companies has already sued to block the medical debt rule finalized last week. A legal challenge to a rule cracking down on Big Tech’s involvement in consumer payments is expected to be filed as early as this week, according to two industry lawyers. Still, if incoming bureau leaders decide not to defend the legality of Chopra’s regulations, that won’t quickly settle the matter. “Even if the new administration agrees with a challenger that a regulation is unlawful, that may not be enough to have the rule vacated by the court,” said Jonathan Ellis, co-leader of the appeals team at McGuireWoods. “Federal courts often hold that judicial vacatur is appropriate only if the court reaches the merits and independently finds that the rule is unlawful.” There are also plenty of consumer advocate groups and state attorneys general who would be willing to defend a contested rule in court. “Regardless of which route is chosen, you can’t just wave a magic wand and get rid of [a rule], and I think that’s part of the strategy Chopra is deploying right now,” Kaplinsky told your host last week. Since mid-October, the bureau has also taken enforcement actions against some of the biggest brands in corporate America. It has sued Apple and Goldman Sachs; Bank of America, JP Morgan Chase and Wells Fargo; Walmart; the credit reporting company Experian; the mortgage lender Rocket Companies; and another mortgage lender owned by Berkshire-Hathaway. Moran offered a note of caution for businesses hoping for a retrenchment in enforcement, pointing to the record of the first Trump term. “It’s a misnomer to think that enforcement is going to be relaxed,” Moran said. “Some of the largest ever consent orders came under [former Trump-era Directors Mick] Mulvaney and [Kathy] Kraninger.” It’s MONDAY — If you’ve got news tips, suggestions or feedback, you can reach Sam at ssutton@politico.com. Or contact your MM host at kodonnell@politico.com.
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