S.jres18 - Disapproving the rule submitted by the Bureau of Consumer Financial Protection relating to Overdraft Lending: Very Large Financial Institutions. (119th Congress)
Summary
Senate Joint Resolution 18 (S.J. Res. 18) aims to disapprove a rule submitted by the Bureau of Consumer Financial Protection (BCFP) concerning overdraft lending practices of very large financial institutions. The resolution was introduced in the Senate on February 13, 2025, and referred to the Committee on Banking, Housing, and Urban Affairs. Subsequently, the committee was discharged by petition, and the resolution was placed on the calendar.
The rule in question, as referenced in the resolution, is found in the Federal Register (89 Fed. Reg. 106768) and dated December 30, 2024. The resolution seeks to nullify this rule, preventing it from taking effect.
This action reflects Congressional oversight of regulatory actions taken by the BCFP, specifically concerning financial regulations impacting large banks and their overdraft lending practices.
Expected Effects
If S.J. Res. 18 is enacted, the BCFP's rule on overdraft lending for very large financial institutions will not take effect. This would mean that the existing regulations or lack thereof, regarding overdraft fees and practices for these institutions, would remain in place.
Consumers might continue to face existing overdraft fee structures, while financial institutions would not be subject to the new requirements outlined in the disapproved rule. The practical effect depends on the specifics of the disapproved rule and what changes it intended to implement.
Potential Benefits
- Prevents potential negative impacts on the profitability of large financial institutions, which some argue could lead to reduced services or increased fees in other areas.
- Maintains the status quo, allowing for further evaluation and debate on the best approach to regulating overdraft lending.
- Could avoid unintended consequences that the new rule might have introduced into the financial system.
- Provides regulatory certainty for financial institutions if the rule is deemed overly burdensome or unclear.
- Allows Congress to exert its oversight role on regulatory agencies, ensuring accountability and preventing regulatory overreach.
Most Benefited Areas:
Potential Disadvantages
- Consumers may continue to be subject to high overdraft fees charged by large financial institutions.
- Missed opportunity to provide greater consumer protection and transparency in overdraft lending practices.
- Could perpetuate existing inequalities in the financial system, where low-income individuals are disproportionately affected by overdraft fees.
- Hinders efforts to reform banking practices and promote responsible lending.
- May create uncertainty if the future regulatory landscape for overdraft lending remains unclear.
Most Disadvantaged Areas:
Constitutional Alignment
The resolution aligns with the principle of Congressional oversight of executive agencies, as established in Article I, Section 1 of the Constitution, which vests all legislative powers in Congress. Congress has the power to enact laws and disapprove regulations issued by executive branch agencies like the BCFP.
The Congressional Review Act (5 U.S.C. 802(c)), cited in the document, provides a specific mechanism for Congress to review and disapprove agency rules. This resolution is an exercise of that power.
By disapproving the rule, Congress is asserting its authority to shape financial regulations and protect the interests of the American people, aligning with the Constitution's allocation of legislative power.
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).