Checks and Balances in Action

Back when we were singing along with, “How a Bill Becomes a Law,” we all learned that the three branches of government have powers that act as checks and balances on the other branches. One of the legislative branch’s powers to check the executive branch is called the Congressional Review Act (CRA). In the world of credit unions, we often mean the Community Reinvestment Act when we talk about CRAs, but in this post, we will only be talking about the Congressional Review Act.

Under the CRA, if both the House and Senate approve a joint resolution of disapproval, which is then signed by the President, the final rule is overturned and the agency is prevented from adopting a rule that is “substantially similar” unless permitted by a later act of Congress.

Timing

Congress has a limited period of time to pass a resolution of disapproval once a rule has been published in the Federal Register. The rule must have been published in the Federal Register starting 60 working days before the end of a session of Congress through the beginning of the subsequent session of Congress. This time includes weekends and holidays but does not include time Congress is in recess for more than three days.

Effect

When a disapproval resolution is signed into law, the rule it concerns will not go into effect if it had not gone into effect when the resolution was enacted.  If it had already gone into effect, it “shall be treated as though such rule had never taken effect.” The promulgating agency may be required by statute to reissue a rule that has been overturned, but they are constrained by the prohibition against reissuing a rule that is “substantially similar” to the original. Two rules have been reissued following disapproval under the CRA. In those matters, the agencies looked to the legislative history of the disapproval resolution to understand and address those aspects of the rule.

History of Implementation

The CRA has been used to overturn twenty regulations since its introduction in 1996. President George W. Bush signed one resolution of disapproval sent to him by Congress. Congress sent President Barack Obama five resolutions but he vetoed them all. In 2017 and 2018, President Donald Trump signed sixteen resolutions of disapproval, including several that overturned regulations issued by his own administration. He vetoed one resolution in 2020. President Joseph Biden signed three resolutions to overturn regulations, all in 2021, while vetoing eleven more.

Current CRA Bills

There are a number of CRA resolutions introduced in the House and Senate as of this writing. The ones that would affect credit union regulations are listed below:
 

• H.J. Res 59 / S.J.Res 18: Disapproving the rule submitted by the Bureau of Consumer Financial Protection relating to "Overdraft Lending: Very Large Financial Institutions" 
  •    H.J. Res 56: Providing for congressional disapproval under chapter 8 of title 5, United States Code, of the rule submitted by the Financial Crimes Enforcement Network relating to "Anti-Money Laundering/Countering the Financing of Terrorism Program and Suspicious Activity Report Filing Requirements for Registered Investment Advisers and Exempt Reporting Advisers".
  •    H.J. Res 55 / S. J. Res 15: Providing for congressional disapproval under chapter 8 of title 5, United States Code, of the rule submitted by the Financial Crimes Enforcement Network relating to "Anti-Money Laundering Regulations for Residential Real Estate Transfers".
  •    H.J. Res 47 through 52 provide for the disapproval of the rule “Quality Control Standards for Automated Valuation Models" which was a joint rule submitted by multiple agencies including the OCC, Federal Reserve, FDIC, NCUA, CFPB, and FHFA. Each resolution addresses one agency’s publication of the rule.

The first Trump Administration demonstrated in 2017 that the CRA can be an effective tool to roll back regulations from a prior administration. We will have to watch and see if it will be wielded as effectively in 2025.

Other Resources:

The Congressional Review Act (CRA): A Brief Overview (Congressional Research Service)
The Congressional Review Act: Determining Which “Rules” Must Be Submitted to Congress (Congressional Research Service)
Congressional Review Act (George Washington University Regulatory Studies Center)
Congressional Review Act: Overview and Tracking (National Conference of State Legislatures)