WASHINGTON May 11 A major challenge to the U.S. watchdog for consumer finances fizzled on Thursday, as Congress missed a deadline to repeal the agency's new rule on prepaid cards.
Late last year, the Consumer Financial Protection Bureau issued a rule requiring greater disclosures and overdraft limits for the cards sold by companies such as Mastercard Inc. and Greendot and frequently used in place of paychecks.
The timing made the rule eligible for Congress to repeal it under the Congressional Review Act (CRA), but lawmakers only had until Thursday to kill the regulation by passing a disapproval resolution in both chambers with simple majorities.
Republican Senator David Perdue of Georgia, one of the agency's biggest critics, had introduced a resolution that he tried to speed through his chamber, but congressional aides and advocacy groups said he could not gather enough votes.
Perdue has repeatedly said the CFPB, created in the 2010 Dodd-Frank Wall Street reform law to protect individuals against fraud, oversteps its authority. Earlier this week he said he intends to keep up pressure on the agency.
The resolution's failure indicates that future regulations from the CFPB, reviled by many Republicans, may have shots at survival. The agency is led by Democrat Richard Cordray, was created by former President Barack Obama, a Democrat, and was originally conceived by Massachusetts Senator Elizabeth Warren, a leader in the liberal wing of the Democratic Party.
The CFPB was expected to soon finalize restrictions on the fine print in contracts known as "mandatory arbitration clauses" that require consumers to give up their rights to class-action lawsuits as a condition of buying a service or product. But the rule's fate has been caught in limbo. Congress is expected to kill it swiftly with a CRA resolution once it is official.
While the first half-dozen CRA resolutions flew easily through Congress, repealing a wide spectrum of Obama-era regulations, the final resolutions faced a tougher time. One limiting methane emissions from oil and gas production on public lands failed on Wednesday. All told, Congress killed 14 regulations since Feb. 1.
Lawmakers could still vote after this week to repeal rules that Obama finished in the last six months of his administration, but they will need super-majorities in each chamber, which is nearly impossible to achieve in the more closely divided Senate. (Reporting by Lisa Lambert; Editing by David Gregorio)