Congress Should Stop CFPB’s Prepaid Card Rule
Congress has the opportunity to stop an onerous 17,000 page rule finalized by the infamous Consumer Financial Protection Bureau (CFPB) last fall, known as the prepaid card rule.
The Congressional Review Act gives the House and Senate the authority to file resolutions of disapproval on agency rules within a 60 legislative day window of their finalization. While Republicans work on their plan to repeal Dodd-Frank, the Congressional Review Act (CRA) gives them the opportunity to go ahead and stop the CFPB’s latest example of blatant regulatory overreach.
The prepaid card rule, set to go into effect this October, would target a financial product largely used by underbanked populations that can’t afford to use other financial services in post the Dodd-Frank era. Prepaid cards, functioning like debit cards, allow people to manage their finances without bank fees or credit cards.
The CFPB, in their infinite wisdom, again assumes customers can’t make informed choices for themselves, absent suffocating government regulation. The CFPB estimates the regulatory burden will amount to an initial 137,642 hours and 19,9484 hours in continual compliance. These costs, inevitably passed onto consumers, will raise costs of these services and reduce innovation and choices in the market, destroying the entire reason the underbanked population turned to these cards to begin with.
Unfortunately, this is just another example of the CFPB “harming those it claims to protect.” Luckily the CRA gives Congress a legislative vehicle to halt these kind of rules. Representative Roger Williams (R-TX) and Senator David Perdue (R-GA) recently introduced resolutions of disapproval on the CFPB’s rule. While stopping the rule would certainly halt the regulatory burden, Congress should consider repealing the CFPB and devolving some of its reasonable responsibilities to other federal agencies.