COMMENTARY: A Chance to Stop an Obama Era Mistake – Let’s Say Goodbye to the Prepaid Card Rule

 

In the waning days of the Obama administration the President’s minions were hard at work fulfilling promises to friends and attempting to sneak through many pet projects. One of these little gems was spawned from the Consumer Financial Protection Bureau or CFPB, an agency created by the Dodd-Frank fiasco. The CFPB wields massive amounts of power and control over the American economy with little oversight.

In October of 2016 the CFPB issued a 1700 page rule call the Prepaid Card Rule. The new rule imposes massive regulation on the prepaid card industry. Prepaid credit cards are used by millions of Americans.

According to an article in Forbes,

“Due to rising checking account fees and minimum balance requirements, some 68 million Americans have turned to prepaid cards and accounts to manage their day-to-day financial needs. These consumers, who simply want to manage their finances at a low-cost rate, cannot afford a sweeping new rule that would impose higher costs.”

The vast majority of these Americans using prepaid cards are working class individuals and minorities simply attempting to get by in our ever-increasing cashless society. The effects of the rule will be felt throughout the entire economy, but the negative effects will instantly hit these who use the cards in day to day life. The rule goes on to stifle entrepreneurial innovation and deny credit to those who need it.

As is often the case when government bureaucrats step in to “Help” they end up hurting the very people they claim to be helping.

“The more the rule has been studied, the higher compliance estimates have grown. It’s now estimated that the Prepaid Card Rule would cost hundreds of millions of dollars. This added expense would force prepaid card companies to exit the marketplace or pass down these costs to consumers, many of whom cannot afford to participate in our traditional banking system.”

It is estimated that the cost of compliance to this rule will reach $1.5 billion! The CFPB is out of control and not acting on behalf of everyday Americans. The good news is there is a chance this can be stopped. Elections have consequences, right? Sometimes good ones.

In both the House and the Senate, Congressional Review Acts (CRA’s) are being brought forth as a way for legislators to stop this act by Obama Bureaucrats. CRA’s have been used by legislators and signed by the Trump administration already to roll back Obama regulations.

The House Joint Resolutions 62 and 73 provide “congressional disapproval” for the rule, and, if passed by both houses of Congress and signed by the President, will have the effect of repealing the rule.

The House resolutions, sponsored by Rep. Tom Graves, (R.-Ga.) and Rep. Roger Williams, respectively, have been referred to the House Committee on Financial Services. Graves’ resolution has three co-sponsors, while Williams’ had 34 co-sponsors—all Republican members of the House Financial Services Committee—when he introduced his measure on Feb. 14.

The Senate version from Sen. David Perdue (R.-Ga.) was introduced on Feb. 2, was read twice and referred to the Committee on Banking, Housing and Urban Affairs. The Senate resolution has nine Republican co-sponsors.

The leadership of both the House and the Senate should get behind this opportunity to stop an Obama-era rule from ever seeing the light of day. Legitimate oversight in our financial sector is of course needed, but allowing the CFPB, a massive piece of bureaucracy run by political appointees to control our financial sector by edict is insanity.

Hopefully, the House and Senate will rein in the CFPB starting with undoing the Prepaid Card Rule.


Cloakroom Confidential

Cloakroom Confidential

Cloakroom Confidential was a longtime Capitol Hill staffer and insider who has contacts in the House and Senate at the highest levels.

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