H.J.Res.59 - Disapproving the rule submitted by the Bureau of Consumer Financial Protection relating to Overdraft Lending: Very Large Financial Institutions. (119th Congress)
Summary
H.J.Res.59 is a joint resolution passed by the House of Representatives disapproving a rule submitted by the Bureau of Consumer Financial Protection (BCFP) regarding overdraft lending practices of very large financial institutions. The resolution specifically targets a final rule published in the Federal Register (89 Fed. Reg. 106768) on December 30, 2024. The resolution states that the rule shall have no force or effect.
The resolution was introduced in the House on February 13, 2025, and referred to the Committee on Financial Services. It was subsequently committed to the Committee of the Whole House on the State of the Union and ordered to be printed on March 21, 2025.
The bill expresses Congress's disapproval of the BCFP's rule, effectively nullifying it.
Expected Effects
If enacted, H.J.Res.59 would prevent the BCFP's rule on overdraft lending for very large financial institutions from taking effect. This would mean that the existing regulations, or lack thereof, on overdraft fees charged by these institutions would remain in place.
Consumers might continue to face potentially high and unpredictable overdraft fees. The financial institutions would not be subject to the new requirements outlined in the disapproved BCFP rule.
Potential Benefits
- Potentially reduces compliance costs for very large financial institutions, which they may pass on to consumers in other ways.
- May prevent unintended consequences of the BCFP rule that could negatively impact the availability of credit or banking services.
- Could allow financial institutions to maintain existing overdraft programs that some consumers find convenient, despite the associated fees.
- May foster a more flexible regulatory environment for financial institutions, encouraging innovation in financial services.
- Potentially avoids disruptions to existing overdraft practices that some consumers may have come to rely on.
Most Benefited Areas:
Potential Disadvantages
- Consumers, particularly those with lower incomes, may continue to be vulnerable to high and unpredictable overdraft fees.
- The lack of regulation could allow very large financial institutions to continue practices that are considered predatory or unfair.
- May hinder efforts to promote financial inclusion and protect vulnerable consumers from abusive lending practices.
- Could undermine the authority and effectiveness of the BCFP in regulating consumer financial products and services.
- Potentially perpetuates a system where financial institutions profit significantly from overdraft fees, which can disproportionately impact financially vulnerable individuals.
Most Disadvantaged Areas:
Constitutional Alignment
The resolution is an exercise of Congress's legislative power under Article I, Section 1 of the Constitution, which vests all legislative powers in the Congress. Congress has the authority to review and disapprove rules issued by federal agencies, including the BCFP, through the Congressional Review Act (CRA). This resolution is an example of Congress using its oversight authority to check the power of the executive branch and ensure that regulations align with congressional intent.
The disapproval of the rule does not appear to infringe upon any specific constitutional rights or protections. The CRA provides a mechanism for Congress to review agency actions, and this resolution falls within that framework.
However, some may argue that frequent use of resolutions of disapproval could undermine the expertise and authority of regulatory agencies, potentially leading to instability in the regulatory environment. This could be seen as conflicting with the goal of promoting the general welfare, as stated in the Preamble of the Constitution.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).