Page 15 - June 20, 2024 Bulletin

Rob Nichols
President and CEO
American Bankers Association
nichols@aba.com

Washington Update

The ‘Other’ CRA: A Lesser-Known Tool in the Policy Toolbox

The banking agencies are tasked with writing implementing Congress passed CRA resolutions three more times during
regulations for the laws enacted by Congress, but they do the Biden administration, and lawmakers continue to
not have free reign. In creating these rules, regulators must introduce them. Recently, ABA supported a CRA challenge
act within the boundaries of their statutory authority or run to the CFPB’s 1071 final rule. That CRA challenge was passed
the risk of legal challenge—and ABA has not been afraid to by a bipartisan majority in both the House and Senate – and
hold them accountable in court when they get it wrong. But though President Biden ultimately vetoed the measure, it
Congress can also hold agencies accountable when there sent a strong and clear signal that Congress disagreed with
are policy disagreements by simply overriding final rules. the bureau’s rule.

In ABA’s view, regulators have exceeded their authority in In addition, a resolution of disproval under the CRA was also
several recent regulatory actions, including the 1071 final passed in May to invalidate the Securities and Exchange
rule, the credit card late fee final rule, the new Community Commission’s Staff Accounting Bulletin 121, which changed
Reinvestment Act final rule, and the expansion of UDAAP the way that banks and other publicly traded entities are
authority via an update to an examination manual. expected to account for digital assets held in custody. ABA
When I addressed bankers at the 2024 ABA Washington is also supporting a CRA challenge to the CFPB’s recently
Summit earlier this year, I assured them that ABA would finalized credit card late fee rule. The House Financial
use every tool in our toolbox to push back against the Services Committee favorably reported that resolution of
“regulatory tsunami” that regulators have unleashed upon disapproval in April.
the banking industry. Litigation is obviously a tool that The Congressional Review Act is so powerful because
we’ve been forced to use now several times – as evidenced resolutions can move to the Senate floor quickly through
by our four current legal challenges against bank regulators an expedited “fast track” procedure and that, once on the
– but it isn’t the only option. floor, a resolution requires only a
Among the other tools available is a lesser-known simple majority vote to pass – not 60 votes, like most
mechanism called the Congressional Review Act—which we legislation. This fast-track process stipulates a specific
sometimes refer to as “the other CRA.” timeframe during which rules issued in this Congress can be
The Congressional Review Act was enacted in 1996 to invalidated by the next Congress: the rule must be issued
provide Congress with an avenue for overturning certain during a window of 60 session or legislative days prior to
federal regulatory actions, but inexperience with the new Congress’ adjournment at the end of the year in order for
law and divided government meant it was only used once in the next Congress to have an opportunity to invalidate the
its first 21 years. During the Trump administration, however, rule. We are now nearing the window where any final rules
when Congress and the White House were controlled by that are issued by the agencies could be challenged under
the same party, the CRA was used successfully 16 times. the CRA in the next Congress – yet another reason why
Highlights included ABA-backed resolutions to overturn electoral outcomes matter.
the CFPB’s rule effectively banning the use of mandatory However the elections shake out in November, ABA’s focus
arbitration for financial products – a rule that ABA strongly will remain unchanged: supporting a policy environment
opposed – and a resolution to nullify the bureau’s 2013 that supports America’s banks in their mission to supply
indirect auto lending guidance, after the Government credit to their customers, clients and communities. And
Accountability Office issued a formal decision in 2017 that we’ll continue to use every tool in the toolbox to ensure
the guidance constituted a rule. that our broad and diverse banking sector can continue to
thrive.

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