K-STREET, 10,000 FEET: Consumer experts, crypto advocates warn against striking rule that could hurt Venmo, crypto

THE LOWDOWN:

• The Consumer Financial Protection Bureau (CFPB) said in a new court filing that it is asking a federal judge to vacate Rule 1033, known as the “open banking rule,” prompting consumer protection experts and cryptocurrency advocates to raise alarm bells that vacating the rule could backfire and harm consumers.

• The open banking rule began during the first Trump administration as Republicans and administration officials worked together to clarify and make improvements to Dodd-Frank. Dodd-Frank was legislation passed in the wake of the 2008 Great Recession and set extensive new rules and regulations for banking.

• The Future of Privacy Forum’s Zoe Strickland explained that 1033 is critical to protecting consumer privacy because it shares responsibilities on both data providers but also recipients.

• Conservatives and consumer advocates alike have made similar arguments — including in the pages of the Washington Reporter.

The Consumer Financial Protection Bureau (CFPB) said in a new court filing that it is asking a federal judge to vacate Rule 1033, known as the “open banking rule,” prompting consumer protection experts and cryptocurrency advocates to raise alarm bells that vacating the rule could backfire and harm consumers.

The open banking rule began during the first Trump administration as Republicans and administration officials worked together to clarify and make improvements to Dodd-Frank.

Dodd-Frank was legislation passed in the wake of the 2008 Great Recession and set extensive new rules and regulations for banking.

One of conservatives’ numerous complaints with Dodd-Frank was that it gave big banks too much control over the financial sector.

Rule 1033 was written to provide clarity and give consumers control over their own financial data so they could use tools they actually like to manage their family finances, like Venmo, Stripe, and others.

Key lawmakers have made it clear that Rule 1033 provisions are critical. Rep. Andy Barr (R., Ky.) explained during a hearing that “open banking can empower consumers with more control over their financial information, foster competition, and spur the development of new tools and services."

Likewise, Rep. Roger Williams (R., Texas) talked about the importance of 1033 data sharing, saying that “these partnerships allow smaller institutions to offer cutting-edge digital tools… and compete with largest national banks.”

The Future of Privacy Forum’s Zoe Strickland explained that 1033 is critical to protecting consumer privacy because it shares responsibilities on both data providers but also recipients.

Strickland told the Reporter that “if you don’t have open banking rules, you don’t have that ability to really put those controls in space.”

Conservatives and consumer advocates alike have made similar arguments — including in the pages of the Washington Reporter.

American Principles Project President Terry Schilling wrote in a Reporter op-ed that “this dynamic is particularly visible in the big bank’s recent lawsuit challenging the CFPB's Section 1033 rule — a clear example of entrenched institutions resisting measures designed to give consumers more control over their own financial data.”

“The rule gives Americans the freedom to use the financial apps they want, whether it is opening a crypto account or paying for a Cybertruck without getting charged bank or card fees,” Schilling wrote.

Likewise, Consumers’ Research’s Will Hild told the Reporter that “financial technology has made life better for everyday Americans, making it easier to pay a friend, move money, or use crypto.”

“In his first term, President Trump took a sledgehammer to the mess Dodd-Frank created and gave consumers real power over their own financial data through Rule 1033,” Hild explained. “But now, the big banks and corporate elites are lobbying to kill that progress.”

“They want to trap families in a rigged system they control,” Hild continued. “Unfortunately for them, the Trump administration has a strong track record of holding the line, ignoring the special interests, and putting hard working Americans first.”

The executive director of the Alliance for Consumers, OH Skinner, also told the Reporter that thus far, the “Trump administration has done a remarkable job so far working to reverse the myriad steps that the Biden administration took to limit consumer choice and force Progressive Lifestyle Choices onto everyday people.”

“But,” Skinner cautioned, “this move by the Trump administration on banking looks like a mistake in terms of consumer choice.”

“Vacating that rule that started under Trump would be a huge gift to the biggest banks, and a huge loss for consumer choice, which has been a centerpiece of this second Trump administration,” Skinner said.

“The Trump administration so far has prioritized deregulation that makes it easier to get the appliances you like, the cars you like, and more,” he continued. “The last thing they should be doing is taking time to rip away consumer choice here.”

“The CFPB should reconsider vacating this rule,” Skinner added.