Providing for congressional disapproval under chapter 8 of title 5, United States Code, of the rule submitted by the Bureau of Consumer Financial Protection relating to the withdrawal of the rule relating to "Consumer Financial Protection Circular 2024-03: Unlawful and Unenforceable Contract Terms and Conditions".
- Sponsor
- Rep. Vargas, Juan [D-CA-52]
- Committees
- Financial Services Committee (primary)
- Last action
- May 13, 2026
Bottom line
This resolution uses the Congressional Review Act to reverse a CFPB decision, aiming to restore consumer protections against certain contract terms previously deemed unlawful or unenforceable by the agency.
What it actually does
This joint resolution seeks to disapprove a rule issued by the Bureau of Consumer Financial Protection (CFPB) that withdrew "Consumer Financial Protection Circular 2024-03: Unlawful and Unenforceable Contract Terms and Conditions." If enacted, H.J. Res. 185 would nullify the CFPB's withdrawal, effectively reinstating Circular 2024-03, which likely provided guidance on contract terms deemed unfair or illegal in consumer financial products.
Proponents argue
Proponents argue that the CFPB's withdrawal of Circular 2024-03 undermined critical consumer protections by allowing financial institutions to include potentially unfair or unlawful terms in contracts. They contend that reinstating the circular through this resolution is necessary to safeguard consumers from exploitative practices and ensure transparency and fairness in financial agreements.
Opponents contend
Opponents of this resolution, who likely supported the CFPB's withdrawal of Circular 2024-03, would argue that the circular imposed undue regulatory burdens on financial institutions, stifled innovation, and created legal uncertainty. They might contend that the CFPB's initial circular overstepped its authority or that market forces are sufficient to ensure fair contract terms without heavy-handed government intervention.
The bill text is extremely short and straightforward, allowing for immediate understanding of its direct action. However, understanding the full implications requires knowledge of the underlying CFPB circular and its withdrawal.
Resolved by the Senate and House of Representatives of the United States of America in Congress assembled, That Congress disapproves the rule submitted by the Bureau of Consumer Financial Protection relating to the withdrawal of the rule relating to "Consumer Financial Protection Circular 2024-03: Unlawful and Unenforceable Contract Terms and Conditions (89 Fed. Reg. 51955 (June 21, 2024))" (90 Fed. Reg. 20084 (May 12, 2025)), and such rule shall have no force or effect.
Disapproval of CFPB Rule Withdrawal
This provision states that Congress disapproves of a specific rule issued by the Bureau of Consumer Financial Protection (CFPB) on May 12, 2025 (90 Fed. Reg. 20084). This CFPB rule itself was a withdrawal of an earlier circular, "Consumer Financial Protection Circular 2024-03," which addressed unlawful and unenforceable contract terms and conditions. By disapproving the withdrawal, this resolution effectively reinstates Circular 2024-03, meaning the CFPB's guidance on problematic contract terms would once again be in effect.
Supporters argue
Supporters argue that the CFPB's original Circular 2024-03 was a vital tool for consumer protection, ensuring that financial contracts are fair, transparent, and legally sound. They contend that its withdrawal was a step backward, and this resolution is essential to restore the agency's ability to police predatory or abusive contract terms, thereby protecting vulnerable consumers from hidden fees, one-sided clauses, and other detrimental provisions.
Critics contend
Opponents of this resolution (and thus proponents of the CFPB's withdrawal) would argue that Circular 2024-03 imposed unnecessary and overly prescriptive requirements on financial institutions. They might claim it stifled innovation, increased compliance costs that would ultimately be passed on to consumers, and interfered with the freedom of contract. They would assert that the market, or existing laws, are sufficient to address contract fairness without this specific CFPB guidance.
Tradeoffs
The provision navigates the tension between robust consumer protection through detailed regulatory guidance and the desire for less regulatory burden and greater flexibility for financial institutions in drafting their contracts. It also highlights the ongoing debate about the appropriate scope of the CFPB's authority and its role in overseeing consumer financial markets.