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CFPB Rules Under Trump 2.0 – Pathways to Nullification

Alert

Under the leadership of then-Director Rohit Chopra, the CFPB carried out an ambitious and politically fraught rulemaking agenda. In the two years preceding President Trump’s second inauguration, the CFPB proposed or finalized at least ten rules covering an array of issues, including credit card late fees, open banking, overdraft, and medical debt. Now that Republicans control the White House and both chambers of Congress, they appear committed to a significant curtailment of the Bureau’s rulemaking activity—if not halting it altogether—and to nullifying many of the rules promulgated by the Chopra CFPB.[1]

Under applicable law, there are a number of pathways that Republicans in Congress, the White House, and the new leadership of the CFPB may take to rescind or nullify rules proposed or finalized by the CFPB under the prior administration. The availability of these pathways depends on the status of the applicable rule—that is, whether it has been finalized or simply proposed—and, for final rules, the date on which the rule was reported to Congress. The CFPB may rescind a rule that has been proposed by simply withdrawing it. As a general matter, withdrawal “effectively erases the earlier proposal, requiring an agency to start over if it wants to proceed with a rule.”[2] With respect to finalized rules, Republicans may pursue three pathways: 

  • Nullification via Congressional Review Act. The Congressional Review Act (“CRA”) permits Congress, by joint resolution passed by a majority of each chamber and signed by the President, to “disapprove” of agency rules within 60 legislative (House) or session (Senate) days of the date on which the agency provides Congress a report relating to the rule.[3] According to current estimates, that means Congress can use the CRA to disapprove CFPB rules submitted to the House or Senate any time on or after August 16, 2024.[4] When Congress disapproves a rule under the CRA, the rule is “treated as though [it] had never taken effect,” and the relevant agency is prohibited from promulgating a rule that is “substantially the same as” the disapproved rule without express Congressional authorization.[5]
  • Rescission via Notice-and-Comment Rulemaking. The CFPB can rescind a rule by initiating a new notice-and-comment rulemaking process. However, that process must be based on a reasoned analysis and cannot be “arbitrary” or “capricious.”[6] The Supreme Court’s 2024 decision in Loper Bright Enterprises v. Raimondo[7] constrains the ability of agencies to change policy by reinterpreting statutes through new rules, but that decision has not yet been tested in a deregulatory environment.
  • De Facto Nullification. The Bureau may also choose, in certain cases, to take steps that result in the de facto nullification of a finalized rule otherwise intact, including by opting not to enforce the rule.[8] However, there are certain cases in which de facto nullification may be impracticable or even unlawful, as described further below.

The table below briefly summarizes and describes the status of the most prominent rules proposed and finalized by the CFPB over the last two years. It also analyzes the availability of each of the pathways to nullification or rescission described above with respect to each of those rules.  In short, all but one of the CFPB’s recent, high-profile rules (the proposed Data Broker Rule) have been finalized. A number of those rules – the Overdraft Rule, the Medical Debt Rule, the Digital Payment Application Supervision Rule, and the 1033 Rule – are within the 60-day window for disapproval under the CRA.[9] However, barring the CRA option, rescinding these finalized rules will require the CFPB to undergo notice and comment rulemaking with respect to each separate rule, a process that is highly resource and time sensitive. While the CFPB may opt not to enforce those rules, much of the industry may continue to comply with them so long as the legal obligations remain.

If you have any questions concerning the material discussed in this client alert, please contact members of our Financial Services Group.

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Rule

Summary

Status

Subject to Nullification Under CRA?

Alternative Forms of Rescission or Nullification

Data Broker Rule

If finalized, the Data Broker Rule would clarify and, in certain instances, expand the scope of the Fair Credit Reporting Act, to ensure the law’s requirements—including its accuracy and dispute resolution requirements—apply to so-called “data brokers.”

Proposed on 12/3/2024.

No. The CRA does not apply to proposed rules.[10]

The CFPB can, and likely will, simply opt not to finalize the rule.

Overdraft Rule

Caps overdraft fees at $5, or at an amount that covers the bank’s costs and losses, unless the bank opts to treat overdrafts as credit under the federal Truth in Lending Act. Applies to banks and credit unions with more than $10 billion in assets.

Finalized on 12/12/2024. Set to take effect on October 1, 2025.

Yes. On February 14, the heads of the House Financial Services Committee and the Senate Banking Committee introduced a joint resolution to disapprove of the Overdraft Rule under the CRA.

The CFPB may initiate a new notice and comment rulemaking process to rescind the Overdraft Rule.

It may also decide not to enforce the rule, although, in that case, the requirements the rule imposes on banks would remain intact.

1071 Rule

Requires financial institutions to compile, maintain, and submit to the CFPB certain types of data regarding applications for credit by minority-owned, woman-owned, and small businesses.

Finalized on 3/30/2023. Compliance dates vary among financial institutions based on number of covered transactions; compliance date for largest lenders is July 18, 2025.

No. The rule was reported and finalized outside the CRA’s 60-day window.

The CFPB may initiate a new notice and comment rulemaking process to rescind the 1071 Rule.

It may decide not to enforce the rule. It may also simply opt not to collect data the rule requires financial institutions to submit, which would have the effect of, for all practical purposes, nullifying part of the rule.

Medical Debt Rule

Prohibits, except in certain circumstances: (1) consumer reporting agencies from including medical information related to a consumer’s medical debt in any consumer report; and (2) creditors from considering such information in any determination of the consumer’s eligibility for credit.

Finalized on 1/7/2025. Effective 3/17/2025.

Yes. The rule was reported within the CRA’s 60-day window.

The CFPB may initiate a new notice and comment rulemaking process to rescind the Medical Debt Rule.

It may also decide not to enforce the rule.

Larger Participant Rule for Digital Payment Applications

Defines wallet providers and fund transfer platforms that facilitate at least 50 million consumer payment transactions annually as “larger participants” of the market for general-purpose digital payment applications, and thus subjects those companies to CFPB supervision.

Finalized on 11/21/2024. Effective as of 1/9/2025.

Yes. The rule was reported within the CRA’s 60-day window.

The Consumer Financial Protection Act says that the CFPB “shall require reports and conduct examinations . . . of,” among others, companies the Bureau defines as “larger participants” of a market for consumer financial products and services. 12 U.S.C. § 5514(b).

The CFPB will need to evaluate its ability to suspend examination activity notwithstanding this statement.[11] The CFPB may also initiate a new notice and comment rulemaking process to rescind the Larger Participant Rule, which would remove it from the scope of this statutory language.

1033 Rule

Requires covered entities, including banks, to make consumers’ data available to the consumer upon request, and limits third parties’ ability to collect, use, and retain consumers’ covered data.

Finalized on 10/22/2024. Effective as of 1/17/2025.

Yes. The rule was reported within the CRA’s 60-day window.

The CFPB may initiate a new notice and comment rulemaking process to rescind the 1033 Rule.

It may also decide not to enforce the rule.

Late Fee Rule

Prevents credit card issuers with more than one million open accounts from charging credit card late fees in excess of $8.

Finalized on 3/5/2024. The rule is currently subject to an injunction pending litigation in federal court.

No. The rule was reported and finalized outside the CRA’s 60-day window.

The CFPB may initiate a new notice and comment rulemaking process to rescind the Late Fee Rule.

It may also decide not to enforce the rule.

  

[1] This is consistent with the White House’s efforts to rein in federal agency rulemaking more generally. On February 18, for example, the White House issued an executive order requiring all agencies to submit draft regulations for White House review, among other things. Exec. Order, Ensuring Accountability for All Agencies, (Feb. 18, 2025), https://www.whitehouse.gov/presidential-actions/2025/02/ensuring-accountability-for-all-agencies/.

[2] Bridget C.E. Dooling, Going Through Regulatory Withdrawal, Yale J. Regulation (Oct. 13, 2020), https://www.yalejreg.com/nc/going-through-regulatory-withdrawal/. Withdrawals of proposed rules “are not expressly described in the [Administrative Procedure Act],” the federal law that governs the federal rulemaking process, but “grew from an operational need.”  Id.  While an agency will typically announce the withdrawal of a rule via notice in the Federal Register, such notice is not technically required.  Id.

[3] 5 U.S.C. § 802(a). This 60-day clock excludes “days either House of Congress is adjourned for more than 3 days during a session of Congress.”  Id. If Congress adjourns for the term within 60 legislative or session days after a rule is submitted, the 60-day clock restarts at the beginning of the subsequent legislative session. 5 U.S.C. § 801(d)(1).

[4] See Kevin Bodargus, The Date is in for Biden Rules Vulnerable to Trump Purge (Jan. 10, 2025), https://www.eenews.net/articles/the-date-is-in-for-biden-rules-vulnerable-to-trump-purge/.

[5] 5 U.S.C. § 801(b)(2). For more information on the contours of the Congressional Review Act, see Congressional Review Service, The Congressional Review Act (CRA): A Brief Overview (last updated Aug. 29, 2024), https://crsreports.congress.gov/product/pdf/IF/IF10023; H. Fechner, M. Shapanka & A. Rickeman, Biden Administration Rulemakings at Risk for Congressional Review Act Cancellation in New Congress (Jan. 9, 2025), https://www.insideprivacy.com/united-states/congress/biden-administration-rulemakings-at-risk-for-congressional-review-act-cancellation-in-new-congress/.

[6] 5 U.S.C. § 706(2).

[7] 603 U.S. 369 (2024).

[8] This client alert does not discuss the potential Constitutional implications of a decision by the federal executive branch not to enforce a final rule. 

[9] While agency guidance arguably is subject to disapproval under the CRA, see, e.g., Letter from S. Poling to P. Toomey, Applicability of the Congressional Review Act to Interagency Guidance on Leveraged Lending (Oct. 19, 2017), https://www.gao.gov/assets/b-329272.pdf, our discussion is limited to final agency rules.

[10] See 5 U.S.C. §§ 551(4), 804(3).

[11] Of note, Acting Director Russell Vought has instructed CFPB employees to “cease all supervision and examination activity.” See Compl., National Treasury Employees Union v. Vought, Case No. 1:25-cv-000381-ABJ, ¶ 12 (D.D.C. Feb. 9, 2025); Kate Berry, CFPB Workers Told to ‘Stand Down,’ Stop All Work, American Banker (Feb. 10, 2025), https://www.americanbanker.com/news/cfpb-workers-told-to-stand-down-stop-all-work.

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