The US House of Representatives has voted to scrap two consumer finance rules adopted under former President Joe Biden. Those rules capped bank overdraft fees and gave officials the power to supervise the legal compliance of tech companies’ digital wallets and payment apps.

Similar resolutions have already passed the US Senate and await President Trump’s signature.

The measures that formally unwound the two rules, originally enacted by the Consumer Financial Protection Bureau (CFPB) in the final days of Biden’s presidency, were passed this week largely along party lines, with the thin Republican majority prevailing.

The tossed-out rules

Specifically, the US House voted to pass SJ Res. 18, which rescinds the CFPB rule called Overdraft Lending: Very Large Financial Institutions, passed the House in a vote of 217 to 211. Under that rule, large financial institutions would have needed to treat overdraft loans just like credit cards and other lending products and in most cases, it would have capped overdraft charges at $5. 

The House also voted to pass SJ Res. 28 – a joint resolution disapproving the rule submitted by the CFPB relating to Defining Larger Participants of a Market for General-Use Digital Consumer Payment Applications, with the resolution passing in a vote of 219 to 211. That rule sought to establish the CFPB’s supervisory authority over certain nonbank-covered people participating in a market for “general-use digital consumer payment applications.”

In other words, it targeted consumer financial products and services offered by large tech providers that are commonly described as “digital wallets,” “payment apps,” “funds transfer apps,” “person-to-person payment apps,” and the like.

Compliance costs

Industry and trade groups supported the two resolutions and had opposed both rules, contending the rules would force companies to pass on the added compliance costs to consumers least able to pay them, were unjustified, and exceeded the CFPB’s authority.

Calling the overdraft feature a “lifeline” for some people, Representative Andy Barr (R-Ky.) said: “Consumers understand the costs associated with overdraft services and they willingly opt in because they find value in the protection that it offers. They’re not coerced. They make an informed decision knowing that a small, predictable fee prevents from severe consequences like a bounced check or late fees.”