Georgia Senator David Perdue wants to overturn the Consumer Financial Protection Bureau’s prepaid rules, which were finalized in August.
Now, seven Republican members of the U.S. Senate are seeking to block implementation of those rules. Sen. David Perdue (R-Ga.) is the primary sponsor of the legislation, claiming the rules are actually hurting consumers who use prepaid cards.
“If the CFPB wants to continue to impose rules and regulations that impact every American’s financial well-being, it must answer to the American people,” said Perdue, a member of the Senate Banking Committee. “As a business guy, I have experienced first-hand the impact overregulation has on growth and innovation. This rule is entirely too broad and would cripple the electronic payment marketplace which Georgians and millions of consumers across the country depend on.”
The National Consumer Law Center says that the attempt to overturn the rules is a part of a larger campaign against the CFPB and that overturning the rules would remove fraud protections and overdraft restrictions, ultimately hurting the consumer.
With the Republican Party in charge of the Congress and presidency, a strong anti-regulatory current is moving through Washington DC. One of the tools Congress has at its disposal to remove regulations is the Congressional Review Act, which is a law that allows Congress to overturn rules issued by a federal agency by issuing a joint resolution of disapproval. That is what is being done in this case.
Ultimately, it is more complicated than a good versus evil story. The industry would like to see the rules changed, but not everyone thinks that a wholesale repeal would be ideal. The industry has long labored under the misperception that prepaid was unregulated before the CFPB rules. While that wasn’t the case, some companies are afraid that a public relations debacle could harm the industry and consumers if the rules are simply dumped. Companies providing services to economically disadvantaged customers are concerned that cardholders and program sponsors will abandon prepaid cards and go back to an expensive cash-based existence.
Overview by Ben Jackson, Director, Prepaid Advisory Service at Mercator Advisory Group
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