Congress Could Test Limits of CRA by Repealing CFPB Guidance from 2013

A new bill in the Senate under the authority of the Congressional Review Act (CRA) is targeting guidance issued by the Consumer Financial Protection Bureau (CFPB) on auto lending discrimination five years ago. Back in 2013, the CFPB published guidance on discriminatory auto industry markups- a practice by which car dealers would add interest on top of 3rd party car loans.

What makes this Congressional action so bold is that the CRA is typically restricted to 60 legislative days after an agency publishes a new rule. However, members of Congress are arguing now that a recent report by Government Accountability Office in December 2017 opens the guidance to repeal under the CRA. GAO found that the guidance functioned like an agency rule and therefore is subject to Congressional review.

Congress has been extremely active using the CRA over the past year to claw back a number of rules promulgated by the CFPB. Last year, Congress repealed the CFPB’s rule banning mandatory arbitration clauses, albeit by a very slim margin. More recently, Senator Lindsey Graham (R- SC) introduced a joint resolution to repeal the CFPB’s Payday Rule.

In response to the GAO report that he requested, Senator Pat Toomey (R- PA) said, “When regulators regulate by guidance rather than through the process they’re supposed to use, which is the Administrative Procedure Act and do a proper rulemaking, they shouldn’t be able to get away with that. If we can get a determination that the guidance rises to the significance of being a rule, then from that moment the clock starts on the CRA opportunity.”