The US Senate has voted to overturn a Consumer Financial Protection Bureau (CFPB) rule aimed at regulating tech giants like Apple, Google, and X, which provide digital payment apps and wallets.
The vote, which followed party lines, supported a Congressional Review Act resolution put forward by Republican Senators Pete Ricketts and Mike Flood. The resolution still requires approval from the House of Representatives.
Established late last year, the CFPB rule seeks to ensure that major nonbank players adhere to federal regulations similar to those followed by large banks and credit unions already under CFPB oversight. This rule would affect companies such as Google, Apple, PayPal, and potentially X, which has plans to introduce payment services within the year.
Elon Musk, the owner of X, has been a vocal opponent of the CFPB’s authority through the Department of Government Efficiency (DOGE). Recently, he expressed his disdain for the CFPB on social media, posting “CFPB RIP” alongside a tombstone emoji.
The CFPB argued that its rule is crucial because companies like Apple Pay and PayPal have gained considerable market presence without undergoing the same level of regulatory scrutiny faced by traditional financial institutions.
Senator Ricketts criticized the rule as a “one-size-fits-all solution in search of a problem,” claiming it inappropriately expands the CFPB’s authority. He stated that his legislation aims to eliminate obstacles to innovation, reduce bureaucratic hurdles, and support job creation.
Penny Lee, CEO of the Financial Technology Association, welcomed the Senate’s move, calling the rule fundamentally flawed for failing to define market specifics or identify particular risks to consumers, and for conflating various usages and products into a uniform approach.
Since former President Trump removed CFPB Director Rohit Chopra shortly after taking office, the bureau has been scaling back its activities under the interim leadership of Russell Vought. It has recently withdrawn numerous lawsuits, including actions against JPMorgan Chase, Bank of America, and Wells Fargo concerning fraud on the Zelle payment network.
Additionally, Democratic Senators Elizabeth Warren and Adam Schiff have requested the Office of Government Ethics to investigate Musk’s compliance with federal ethics laws due to his financial interests and activities with DOGE. Their letter highlights X’s payment initiatives and Tesla’s auto financing, underscoring the CFPB’s essential role in supervising the auto lending sector and protecting consumers from fraudulent practices. They express concerns that Musk’s actions could beneficially intertwine with the interests of X, Visa, and Tesla, thus potentially financially benefiting him.