A Republican Congress and the incoming Trump administration may employ the CRA to quickly overturn recent rules that faced heavy criticism from the financial services industry.
By Jenny Cieplak, Zachary Fallon, Arthur Long, Parag Patel, Barrie VanBrackle, Stephen Wink, and Deric Behar
Every four years in American politics is an opportunity to turn the tables on the party in power. But leading up to and following an election that shifts control of the government from one party to another, an outgoing administration has a brief opportunity to execute any outstanding items on its agenda, particularly through the agency regulatory process. In the twilight of a presidential administration, federal agencies therefore tend to accelerate their volume of rulemaking, both to tie up loose ends and solidify the administration’s legacy.
To check this barrage of “midnight rulemaking” at the end of an outgoing president’s term, incoming administrations have at their disposal the Congressional Review Act (CRA), a powerful tool to overturn and undo the rules finalized by their predecessors.
The CRA: History and Process
The CRA, enacted as a component of the Small Business Regulatory Enforcement Fairness Act of 1996 (5 U.S.C. §§801-808), empowers Congress to review and overturn certain regulations issued by federal agencies.
Executive and independent agencies are required by law (5 U.S.C. §§ 551–559) to engage in an administrative rulemaking process when issuing their regulations. This process includes public notice and comment periods and publishing proposed and final rules in the Federal Register.
The CRA requires agencies to submit final rules to Congress for review at the end of this process. Congress then has a 60-day window to review the final rule. A joint resolution of disapproval that passes both the House and Senate, and then signed by the president (or whose veto is overridden by Congress), prevents the rule from going into effect.
The Post-Election “Lookback Window”
The CRA can be a powerful tool for a new administration and an aligned Congress to repeal the regulations that the prior administration’s agencies implemented. Under normal circumstances, undoing a formal rulemaking requires a new formal rulemaking. The CRA provides the means to quickly advance the new president’s agenda.
The special process through which Congress can pass a joint resolution of disapproval under the CRA includes simple majority votes in both the House and, more importantly, the Senate, where major policy shifts are generally blocked via the filibuster. Without the threat of partisan gridlock, joint resolutions can go from Congress to the president’s desk relatively quickly, and thus serve as an expedited means to enact policy change in a new government.
The 60-day opportunity that the CRA provides to Congress to review agency rules also carries between successive administrations, creating a “lookback window” for a party in control of the federal government to overturn rules that remain under congressional review. These 60 days are legislative working days, determined by when the House or Senate are in session, and can capture the rules passed in the final months of an outgoing administration.
The outcome of the 2024 election, like the elections in 2020 and 2016, saw a shift in government control from one party to another. It thus offers an opportunity for the incoming Trump administration and new Republican majorities in Congress to use the CRA to address Biden administration regulations within the lookback window.
Recent Financial Regulations Within Scope of the Lookback Window
The current lookback window available to the Trump administration will reach back to early- to mid-August 2024. Several financial regulatory rules have been finalized in this time span, many of which have been subject to criticism, pushback, and even litigation from industry groups and market participants. The final rules that may be in jeopardy include the following:
- The Federal Deposit Insurance Corporation (FDIC) and Office of the Comptroller of the Currency’s (OCC) Bank Merger Transactions Rule (89 FR 79125), finalized on September 17, 2024, and effective as of January 1, 2025. This rule aims to enhance clarity and transparency in the bank merger process (for more information, see this Latham blog post).
- The Consumer Financial Protection Bureau’s (CFPB) Open Banking Rule (89 FR 90838), finalized on October 22, 2024, and effective as of January 17, 2025. This rule requires covered financial institutions to make consumer financial data available both to customers and to a customer’s authorized third parties upon request (for more information, see this Latham blog post).
- The CFPB’s Digital Wallets and Payment Apps Supervision Rule (89 FR 99582), finalized on November 21, 2024 and effective as of January 9, 2025. This rule subjects large participants in the digital payments market to the same federal consumer financial laws and supervisory rules as banks, credit unions, and other financial institutions that the CFPB already supervises.
- The CFPB’s Overdraft Lending Rule (89 FR 106768), finalized on December 12, 2024, and effective October 1, 2025, aims to limit overdraft fees charged by very large financial institutions.
- The US Department of the Treasury and the Internal Revenue Service’s (IRS) Tax Reporting Requirements for Brokers of Digital Assets (89 FR 106928), finalized December 27, 2024, and effective on February 28, 2025. This rule requires that brokers of digital assets (including DeFi brokers) report gross proceeds of the transactions they intermediate on a Form 1099 to customers.
- The US Department of the Treasury’s Financial Crimes Enforcement Network’s (FinCEN) Anti-Money Laundering Program Rule (89 FR 72156), finalized on September 4, 2024, and effective January 1, 2026, would expand anti-money laundering obligations to investment advisers.
Other heavily criticized regulations — including the CFPB’s Late Fee Rule (89 FR 19128), finalized on March 5, 2024 — are outside of the CRA’s lookback window and can only be overturned through formal rulemaking or legislation.
Rules by Other Names
Federal agencies have many tools at their disposal to exercise regulatory authority outside of the formal rulemaking process. Agencies can bring enforcement actions, issue guidance documents, or release public guidance or letters that can have similarly influential effects to a rule, and are far easier to execute than a formal rulemaking.
Although the CRA only applies to rules, the law adopts the broadest definition of a “rule,” and agency actions that do not undergo the formal notice and comment, publishing, and submission to Congress may be captured by CRA oversight. In these instances, a member of Congress can seek an opinion from the Government Accountability Office (GAO) to determine if additional agency actions may be considered rules under the law and thus be subject to the CRA.
One prescient example of the conflict between covert agency rulemaking and congressional review was the Securities and Exchange Commission’s (SEC) Staff Accounting Bulletin No. 121 (SAB 121), issued by the SEC on March 31, 2022, as an “interpretive release” rather than a formal rule. SAB 121 advised financial firms to disclose information pertaining to crypto holdings. Though the SEC did not view SAB 121 as a “rule” and did not submit the action for congressional review, Congress challenged this determination and GAO issued a favorable opinion on October 31, 2023: “We conclude the Bulletin is a rule for purposes of CRA because it meets the APA definition of a rule, and no exceptions apply. Therefore, the Bulletin is subject to the requirement that it be submitted to Congress.” Congress then passed a joint resolution of disapproval to reverse SAB 121, which President Biden subsequently vetoed. The SAB 121 saga reflects the potential reach of the CRA beyond formal rulemaking, which would have been successful but for the executive veto.
Ramifications of CRA Reversal
A rule overturned by the CRA “may not be reissued in substantially the same form” unless specifically authorized by law. What makes one rule “substantially” similar to another is undefined and its application is legally and regulatorily ambiguous.
Though these controversies are novel and have not been heavily litigated, this aspect of the CRA can create an additional barrier to future rulemaking.
Conclusion
The use of the CRA — and the controversies surrounding the implications of its exercise — is relatively novel. While the CRA was only used once in the first 20 years after its enactment in 1996, it has been used 19 times between the two most recent administrations, and has therefore become an important regulatory (or deregulatory) tool in periods of political transition.
The Trump administration now has an opportunity to undo rules that were finalized in the eleventh hour of the Biden administration. The financial regulatory actions that the Biden administration took since August 2024 are now at risk of not only being overturned, but also of being barred from ever being finalized via similar rulemaking.
Whether Congress and the Trump administration will pursue this course of action in a busy first-100 days remains to be seen, but is very likely if CRA use during the opening months of the 2017 and 2021 administrations is any indication.
This post was prepared with the assistance of Connor Jobes.