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Congress votes to repeal an agency guidance document for the first time (2018)

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See also: Guidance document and Congressional Review Act

On May 8, 2018, the U.S. House of Representatives passed a Congressional Review Act (CRA) resolution to overturn an agency guidance document. The U.S. Senate had already approved the measure the previous month. The resolution addresses a guidance document issued in 2013 by the Consumer Financial Protection Bureau (CFPB), a federal agency that regulates financial institutions. The document advised indirect auto lenders on how to comply with some of the laws and regulations administered by the CFPB.[1][2]

President Donald Trump (R) signed the resolution into law on May 21, 2018, making it the first time that the CRA was used to overturn a guidance document rather than a rule issued through the rulemaking procedures of the Administrative Procedure Act. Under the CRA resolution, the bulletin was invalidated and the CFPB will not be able to issue similar requirements in the future.[3][1][2]

The Congressional Review Act: what it is and how it works

The Congressional Review Act (CRA) is a federal law passed in 1996 creating a review period during which Congress, by passing a joint resolution of disapproval that is then signed by the president, can overturn a new federal agency rule and block the issuing agency from creating a similar rule in the future. The CRA is used by Congress and the president as a check on the rulemaking activities of federal agencies.[4][5][6]

The CRA provides Congress with a window of 60 legislative days to disapprove a new rule. Agencies are required by the CRA to submit all new rules to Congress and the Government Accountability Office (GAO) before they can take effect. The 60-day time limit for congressional action does not begin to elapse until the rule has been both published in the Federal Register and submitted to Congress and GAO, whichever is later. CRA resolutions require a simple majority to pass each house, and a filibuster in the Senate can be avoided with a petition of 30 senators.[4][5][6]

Prior to 2017 the law was successfully used only once, to overturn a rule on ergonomics in the workplace in 2001. In the first four months of his administration, President Donald Trump (R) signed 14 CRA resolutions from Congress undoing a variety of rules issued near the end of Barack Obama's (D) presidency.[4][5][6] On November 1, 2017, President Trump signed a CRA resolution repealing a regulation issued by the Consumer Financial Protection Bureau (CFPB), bringing the total number of rules repealed during his administration by that date to 15.[7][8][9]

The challenged guidance document: CFPB Bulletin 2013-02

The document, "CFPB Bulletin 2013-02: Indirect Auto Lending and Compliance with the Equal Credit Opportunity Act," was issued on March 21, 2013. According to its introduction, the bulletin "provides guidance about compliance with the fair lending requirements of the Equal Credit Opportunity Act (ECOA) and its implementing regulation, Regulation B, for indirect auto lenders" within the CFPB's jurisdiction.[10]

Indirect auto lenders include banks and nonbank institutions that are contracted by dealerships to provide loans to customers. Indirect auto lending differs from direct lending, which is when a vehicle customer obtains their loan directly from a financial institution.[10] According to The Hill, "The auto-lending policy was not issued as a formal rule, but served as the legal justification for a slew of CFPB lawsuits against car dealers."[1]

How the rule is being repealed: a new application of the CRA

The repeal process for the CFPB bulletin began in late 2017. On December 5, 2017, the Government Accountability Office (GAO) issued a determination that the CFPB's indirect auto lending bulletin was a rule for the purposes of the Congressional Review Act (CRA). The GAO made this determination in response to a study request from Sen. Pat Toomey (R-Pa.).[11]

In March 2018, Sen. Jerry Moran (R-Kan.) introduced a CRA resolution to overturn the CFPB's guidance. The U.S. Senate passed the resolution on April 18, 2018. The vote was 51-47, with all present Republicans and West Virginia Democrat Joe Manchin voting in favor. Sens. John McCain (R-Ariz.) and Tammy Duckworth (D-Ill.) were absent.[1] The U.S. House of Representatives passed a corresponding resolution on May 8 by a vote of 234-175. The measure was mainly supported by Republicans, with 11 Democrats also voting for the resolution.[2] President Donald Trump (R) signed the resolution into law on May 21, 2018.[3]

See also

External links

Footnotes

  1. ↑ 1.0 1.1 1.2 1.3 The Hill, "Senate repeals auto-loan guidance in precedent-shattering vote," April 18, 2018
  2. ↑ 2.0 2.1 2.2 The New York Times, "House Votes to Dismantle Bias Rule in Auto Lending," May 8, 2018
  3. ↑ 3.0 3.1 Congress.gov, "S.J.Res.57," accessed May 22, 2018
  4. ↑ 4.0 4.1 4.2 U.S. News, "Democrats Push to Repeal Congressional Review Act," June 1, 2017
  5. ↑ 5.0 5.1 5.2 The Hill, "The Congressional Review Act and a deregulatory agenda for Trump's second year," March 31, 2017
  6. ↑ 6.0 6.1 6.2 Smithsonian Magazine, "What Is the Congressional Review Act?" February 10, 2017
  7. ↑ Reuters, "Trump kills class-action rule against banks, lightening Wall Street regulation," November 1, 2017
  8. ↑ Washington Examiner, "Mike Pence casts tie-breaking vote to cancel Obama-era rule favoring class-action suits against banks," October 24, 2017
  9. ↑ Los Angeles Times, "Senate votes to kill new rule allowing class-action lawsuits against banks after Pence casts deciding vote," October 24, 2017
  10. ↑ 10.0 10.1 Consumer Financial Protection Bureau, "CFPB Bulletin 2013-02," March 21, 2013
  11. ↑ Government Accountability Office, "Applicability of the Congressional Review Act to Bulletin on Indirect Auto Lending and Compliance with the Equal Credit Opportunity Act," December 5, 2017
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