Sen. David Perdue (R-Ga.) is seeking to nullify regulations on prepaid spending cards, a move that is drawing fire from consumer groups and lackluster support from industry.
Perdue’s resolution, which was referred to the Banking Committee Wednesday, is the Senate’s first attempt to use the Congressional Review Act against the CFPB. It could offer a hint of the bureau’s future and test the political strength of its allies and detractors.
Some Republicans are urging President Donald Trump to fire the bureau’s director, Richard Cordray, and GOP lawmakers are pushing to weaken the agency’s independence.
The prepaid card rule, which takes effect in October, isn’t considered by banks to be among the agency’s worst regulations. It was, however, hotly debated, drawing more than 65,000 comments and taking two years to finalize. It limits consumer liability on lost or stolen cards and standardizes fee disclosures to make comparison shopping easier.
Perdue, a member of the Banking Committee, has been a longtime critic of the CFPB, which he has called a “rogue agency.” NetSpend, a prepaid card operator, is based in Perdue’s state.
“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,” Perdue said in a written statement.
Banking lobbyists and their allies on Capitol Hill are far from unified behind the Perdue resolution, which so far has seven co-sponsors. Some think the CFPB’s rule is workable and isn’t worth targeting with a blunt tool like the CRA.
Others want lawmakers to hold their fire until the bureau releases regulations on mandatory arbitration, which could land as soon as this month. The arbitration rule would have a bigger impact on a larger group of companies.
“None of the mainstream prepaid industry wants this,” said Lauren Saunders, associate director of the National Consumer Law Center. “This is being pushed by NetSpend to preserve their $80 million in overdraft fees on payday-lender prepaid cards and payroll cards for low-wage workers.”
NetSpend did not immediately respond to a request for comment. Several banking lobbyists declined to speak on the record.
Between 2012 and 2014, the number of people using prepaid spending cards jumped 50 percent, according to a survey by Pew Charitable Trusts. By 2018, consumers are expected to have $112 billion loaded onto the cards, according to a CFPB estimate, up from $65 billion in 2012.
Zachary Warmbrodt contributed to this report.
