President-elect Trump’s Deregulatory Agenda

In an op-ed published last week in The Wall Street Journal, Elon Musk and Vivek Ramaswamy, who will co-lead President-elect Donald Trump’s Department of Government Efficiency (DOGE), made it clear they are not just out to cut government spending.

They plan to take an axe to the regulatory state.

“Most legal edicts aren’t laws enacted by Congress but ‘rules and regulations’ promulgated by unelected bureaucrats — tens of thousands of them each year,” Musk and Ramaswamy wrote. “This is antidemocratic and antithetical to the Founders’ vision. It imposes massive direct and indirect costs on taxpayers. Thankfully, we have a historic opportunity to solve the problem. On Nov. 5, voters decisively elected Donald Trump with a mandate for sweeping change, and they deserve to get it.”

The Republican lawmakers who have actually been elected to office are also eager to do their part and have the opportunity to undo some late-stage Biden administration regulations using the Congressional Review Act (CRA). What is the CRA and what financial services and financial technology regulations are likely to be targeted by Musk, Ramaswamy, President-elect Trump, and other Republicans?

Let’s take a look.

What Is The Congressional Review Act?

As experts at George Washington University’s Regulatory Studies Center explain, the CRA establishes certain procedures that allow lawmakers to overturn final regulations issued by federal agencies. Once an agency’s rule is reported to Congress, lawmakers have 60 days to introduce a joint resolution disapproving of the rule. (The law is very clear on this time frame: the joint resolution must be introduced during a 60-days-of-continuous-session period that begins once the rule has been published in the Federal Register and been received by Congress.)

If approved by both chambers of Congress and signed into law by the president, these resolutions of disapproval (RDs) overturn the rule in question. They also bar agencies from issuing a “substantially similar” rule for a period of five years.

This authority is relatively new. The CRA was enacted as part of the Small Business Regulatory Enforcement Fairness Act in 1996.

Again, the president must sign RDs into law for a rule to be overturned. Obviously, if that president’s administration issued the regulation in the first place, he or she would veto the resolution, keeping the rule on the books unless each chamber of Congress had the votes to override the veto. President Joe Biden, for example, has vetoed at least seven CRA resolutions during his four years in office.

The CRA becomes more effective during a period of transition like the one the country is in now: when a new president from the party previously not in the Oval Office comes to power. Indeed, according to the nonpartisan Congressional Research Service, the CRA only has been used to overturn a total of 20 rules: one in the 107th Congress, which started in 2001; 16 in the 115th Congress, which started in 2017; and three in the 117th Congress, which started in 2021. During each of those three years there was a turnover in which party held the White House.

What Rules Can Congress Undo With The CRA?

According to the Regulatory Studies Center, any regulation finalized by the Biden administration after August 1, 2024 could fall victim to the CRA. The majority of these rules are not related to financial services or financial technology policy. In fact, the Regulatory Studies Center found that of the 874 final rules issued between August 1 and November 19, nearly 60 percent come from the Department of Transportation, the Department of Homeland Security, the Environmental Protection Agency (EPA), and the Department of Commerce.

The major rules that Congress is most likely to target are:

• An EPA rule that allows the agency to collect a charge on methane emissions that exceed statutory thresholds;
• A Department of Health and Human Services rule that raises wages for teachers who teach in Head Start programs;
• An EPA rule that requires water systems to replace all lead service lines within 10 years of the rule’s compliance date; and
• A Food and Drug Administration rule that prohibits the sale of tobacco to people under the age of 21.

At least one CFPB regulation is squarely in the CRA window: the Bureau’s medical debt rule. As a reminder, this proposal would remove medical debt from most consumers’ credit reports. The banking industry and Republicans in Congress have made it clear they oppose this rule, which would make it easier for consumers with medical debt to gain access to loans, mortgages, and other lending products since it would wipe away debts they owe to hospitals and medical practices. Critics of the rule, including some hospital systems, argue that removing medical debts from credit reports will make underwriting credit risk more difficult and disincentivize consumes from paying what they owe to medical providers.

Though they have given no indication they will exercise this option, GOP lawmakers also could use the CRA to undo the CFPB’s open banking rule, which was finalized just last month. Unlike the medical debt rule, this regulation enjoys bipartisan support, so it is not likely to be on the CRA priority list.

According to Bloomberg Law, Republicans also may leave the CFPB’s “larger participant” digital payments rule alone. This rule, finalized just last week, subjects some digital payment platforms to direct CFPB supervision. Bloomberg’s Evan Weinberger explained the rule “has the support of banks who want their big tech competitors brought under the same supervisory umbrella. It’s also backed by consumer advocates who say the rule fills a regulatory vacuum for popular apps such as Apple Pay and Google Pay.”

Using the Regulatory Studies Center’s August 1 date, it is likely that the CFPB’s credit card penalty fee rule, overhaul of Regulation Z, and rule regarding the registry of nonbank covered persons are safe from a CRA challenge even though resolutions to disapprove of them have been introduced by GOP lawmakers. The Federal Trade Commission’s noncompete rule, which has been overturned by a federal court, also is likely to be safe.

According to the U.S. Chamber of Commerce, Congress also could target Treasury Department rules regarding money laundering under the CRA, along with the Securities and Exchange Commission’s Regulation National Market System (Reg NMS) that was issued in September.

What Regulations Will The Trump Administration Target?

As Politico noted in August, along with the CRA, “Republicans have other tools at their disposal to attack Biden’s regulatory legacy. Perhaps the biggest threat is a federal judiciary that’s been willing to reject novel regulatory interpretations — and one that is now armed with a new Supreme Court ruling that drastically curtails agencies’ regulatory powers to interpret vague or unclear congressional mandates.”

The CFPB’s open banking rule is one of the regulations that has been challenged in court. President-elect Trump has not made it clear whether his administration will defend this rule, though it is notable that his first administration began the process of writing a rule to implement open banking in the United States.

Once in office, President-elect Trump also could start the process of undoing other regulations via executive order. Robert Glicksman, a professor at George Washington University Law School, told Fox News Digital, “The first thing is that on day one of [Trump’s] presidency, we’ll see a lot of executive orders, which will order agencies to review the administration regulations to determine whether they should be retained, amended or repealed.” Glicksman predicted President-elect Trump is likely to focus those executive orders on labor- and climate change-related regulations.

How will the Trump administration approach CFPB rules that are outside the CRA window? That is unclear. “President-elect Trump is likely to curtail the Bureau’s rulemaking activity. But not all rulemaking activities may be stopped,” wrote legal expert Jim Sandy earlier this month. “For instance, in September, President Trump made headlines by calling for a cap on credit card interest. While the proposal is not identical to the CFPB’s final rule curbing credit card late fees, it nonetheless may evidence President-elect Trump’s interest in reducing costs to consumers.”

President-elect Trump also reportedly will act quickly to transform regulation of digital assets. Yesterday afternoon, Fox Business reported that he plans to transfer crypto regulatory powers to the Commodity Futures Trading Commission. “The move would come as part of a broader effort by President-elect Donald Trump and the Republican majorities in Congress to roll back some of the regulatory power the Securities and Exchange Commission has wielded over the digital asset industry under President Biden and his outgoing SEC chairman, Gary Gensler,” Fox Business explained.

According to the American Action Forum (AAF) on his first day in office, President-elect Trump also is likely to issue an executive order establishing a “regulatory freeze.” That edict would mean all federal agencies would have to “cease work on any rulemakings currently under development in order to ascertain whether it aligns with the incoming administration’s policy preferences.” As AAF noted, “it is standard practice for an incoming administration, especially one succeeding an administration of the other party. The Obama, (first) Trump, and Biden Administrations all issued such a directive.”

To restrain regulations over the longer term, AAF predicted the Trump administration will reimplement the “regulatory budget” program it used during Donald Trump’s first term in office. “The concept of such a framework is relatively simple: Much as it would for a fiscal budget, the administration sets a certain level of agency-by-agency regulatory costs or cost savings it expects to produce in a given year,” AAF explained. “Under the first Trump term, the standing policy was also to eliminate two rules for each new one. During this past campaign, candidate Trump announced that his expected ratio is now 10-to-1.”

That pledge must have been music to Elon Musk’s ears.