Senator Sherrod Brown wants to use ‘congressional review act’ to overturn Trump-era financial rules

WASHINGTON, DC – Now that former President Donald Trump has been removed from office, US Senator Sherrod Brown is using his chairmanship of the US Senate committee that oversees the banking system to overturn regulations passed by the Trump administration in its dying days which he considers anti-consumer.

On Thursday, Brown joined a Democratic colleague of the US Senate Committee on Banking, Housing, and Urban Affairs, Maryland Senator Chris Van Hollen, in introducing legislation to repeal the so-called “real lender rule,” the office from Trump’s Comptroller of the Currency. finalized in the last months of administration. The pair say the Trump administration rule allows predatory lenders to bypass state laws that lower interest rates on loans and allow them to prey on vulnerable consumers.

Brown too introduced a resolution to quash the proceedings the Securities and Exchange Commission finalized at the end of last year that affect how shareholders can present proposals at company meetings. Under the Brown settlement fights, shareholders who present resolutions at company meetings must hold a larger share of the company’s shares for a longer period than was previously necessary.

Brown uses a 1996 law called “Congress Review ActFor both efforts. It allows a new Congress to repeal federal agency rules that were passed in the last 60 working days of the previous Congress. According to the Congressional Research Service, it was used to overturn 17 rules. Sixteen of them were Obama administration rules that Republicans who controlled Congress and the White House in 2017 rescinded after Trump took office. The rules that Republicans overturned included a flow protection measure and Bureau of Consumer Financial Protection rules on auto loans and arbitration.

The measures of the Congressional Review Act must be passed by both houses of Congress by a simple majority. After that, the president has to sign them. Since presidents are unlikely to sign resolutions that overturn rules issued by their own administrations, the process is more likely to be used after elections where the outgoing or outgoing party loses and both houses of Congress are aligned with the incoming chair.

Other US senators are trying to use the procedure to reverse Trump administration rules set by the Equal Employment Opportunity Commission that critics say it is more difficult for workers to get justice if they have been discriminated against on the job, and to stop a rule which limits the ability of the Environmental Protection Agency to regulate methane, a greenhouse gas which environmental groups say contributes to climate change.

Brown’s office says April 2 is the deadline to bring the Congressional Review Act efforts into the current Congress and must pass within the 60-day Senate session of February 2. He hopes his measures will be voted on before June.

Brown says the SEC rule he wants to overturn makes it harder for small shareholders to submit proposals for consideration by all shareholders at company annual meetings, and resubmit them repeatedly to raise awareness of the issues. problems and get companies to adopt them eventually.

“These rules were yet another ploy by the Trump administration to undermine shareholder democracy,” a statement from Brown said. “Changes to the SEC’s shareholder proposal rule last year made it much more difficult for working families and investors to hold company management accountable. By increasing the eligibility and resubmission thresholds for shareholder proposals, the rules remove an important tool for promoting better corporate governance, increasing transparency and reducing the gender pay gap. Congress needs to repeal the rule and we need to find ways to increase shareholder participation and make executives more accountable. “

Brown says the “real lender rule” he wants to overturn “guts out state consumer protection laws and allows unregulated payday loans across the country.”

“For years under the Democratic and Republican administrations, federal regulators cracked down on abusive ‘bank hire’ systems in which payday lenders funnel their predatory high-interest loans through national banks to escape credit limits. state interest rates, ”said a separate Brown statement. “The OCC rule is a complete reversal of that policy, a betrayal of hard-working American families and a shameful attack on the ability of states to protect their citizens from predatory loans.

According to Reuters, FinTech firms had researched the “real lender rule” for legal certainty as to whether state or federal rules applied when partnering with traditional lenders to issue loans. Democrats say the rule is in fact designed to allow those companies to evade state usury laws and rate caps by partnering with banks subject to more flexible federal lending rules.

They say states and the District of Columbia have rules in place to protect consumers from abusive lending rates, but state chartered, federally insured banks are exempt through the Federal Deposit Insurance Act. The OCC rule allows non-banks to use banking partnerships to circumvent state laws and enforce outrageous annual percentage rates that have reached 179%, they say. They describe the agreements as “bank leasing systems”, in which the bank attaches its name to the transaction while the customer deals entirely with the non-bank lender, who markets, underwrites, arranges and collects the loan payments.

Republicans in Congress argued that the change has helped American consumers and businesses.

A 2020 letter in support of the measure signed by Republicans on the House Financial Services Committee, including Anthony Gonzalez of Rocky River and Warren Davidson of Miami County, said the rule would resolve lawsuits against non-bank fintech companies that partner with banks to provide consumer loans. The plaintiffs asserted that the FinTech companies were not “true lenders” or that they were engaged in a “lease-to-hire” program, and “therefore, the interest rate cap of the Home state of the borrower, rather than that of the responsible sponsor. bank, should apply, ”their letter said.

“The uncertainty surrounding this issue arising from the ongoing litigation casts doubt on loans made under the bank-fintech partnership model and could reduce the availability of credit in affected areas,” the GOP letter continued. “Loans to third parties are subject to the same supervisory control as a bank loan when there is a bank-fintech relationship. Since these cases point to a lack of third-party supervision by the banks in question, we believe that the OCC and the Federal Deposit Insurance Corporation (FDIC) have the necessary legal obligation and authority to promulgate rules to clarify which entity is the “true lender”. “. “

Consumer organizations have hailed Brown’s efforts to overturn a rule that allows predatory lending.

“Congress must reverse this rule to protect the hard-fought consumer protections that protect Americans’ paperbacks and peace of mind,” said a statement from Kalitha Williams, project director of Policy Matters Ohio, an institute of research on nonprofit and nonpartisan leftist state policies. offices in Cleveland and Columbus.

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