The US Senate has voted to overturn a Consumer Financial Protection Bureau rule that would give the watchdog oversight of tech giants, such as Apple, Google and X, that offer digital payment apps and wallets.
Voting along party lines, the Senate backed a Congressional Review Act resolution introduced by Republicans Pete Ricketts and Mike Flood. It still needs to pass in the House of Representatives.
Finalised late last year, the CFPB rule is designed to ensure that the big nonbank players follow federal law just like large banks, credit unions, and others already under its supervision.
In addition to the likes of Google, Apple and PayPal, it would likely impact X, which has outlined plans to add payment services this year.
X owner Elon Musk has been leading the Trump administration's charge against the CFPB through the Department of Government Efficiency (DOGE). Last month he posted “CFPB RIP” with a tombstone emoji on his site.
The CFPB had argued that the rule was necessary because the likes of Apple Pay and PayPal have gained significant market share in recent years without receiving the same regulatory scrutiny and oversight as traditional FS players.
Explaining his efforts to scrap the rule, Senator Ricketts says: "This one-size-fits-all solution in search of a problem unnecessarily expands the CFPB’s authority. Our legislation eliminates barriers to innovation, cuts red tape, and supports our job-creators."
Financial Technology Association CEO Penny Lee has welcomed the effort, stating: "The final rule was deeply flawed, failed to define a market or identify specific risks to consumers, and conflated diverse uses and products into a one-size-fits-all approach."
Since Trump fired director Rohit Chopra soon after taking office, the CFPB has been busy scaling back its activities under acting Director Russell Vought. In recent weeks it has also dropped a host of lawsuits, including against JPMorgan Chase, Bank of America and Wells Fargo over fraud on the Zelle P2P payments network.
Meanwhile, Democrat Senators Elizabeth Warren and Adam Schiff have written to the Office of Government Ethics, asking it to probe Musk’s compliance with federal ethics laws, given his financial interests and work with DOGE.
The letter cites X's payments plans and Tesla's auto financing services, stating: "The CFPB plays a critical role in supervising the auto lending industry and protecting consumers from corporate malfeasance and scams. Therefore, actions by Mr Musk and DOGE at the CFPB have the potential to directly benefit X, Visa, and Tesla — and by extension, Mr Musk."