Senate Republicans Effectively Legalized Debanking
The CFPB rule took years to implement due to Wall Street opposition.
Senate Republicans on Wednesday moved to allow payment apps like Venmo and PayPal to return to ideological debanking—repealing a rule implemented in December by the Consumer Financial Protection Bureau. The rule also required the apps to create a smooth process for dispute resolution when fraudulent activity occurs. Repeal of the rule would leave users of the apps in limbo, as the laws protecting consumers would still be in place, but the rule enforcing the law—and the bureau with the capacity to enforce it—would not.
The vote on Wednesday afternoon won the support of every Senate Republican who voted, with the exception of Josh Hawley of Missouri, who has regularly broken with his party in support of populist economic policies. The resolution to repeal the rule did not require the typical 60 votes to move forward, meaning Republicans could repeal the debanking rule with just 51 votes and without needing Democratic support.
In order for the repeal to go into effect, the House also has to pass a companion measure, HJ Resolution 64, sponsored by Republican Rep. Mike Flood. With Democrats in opposition to repeal, only a handful of Republicans would need to vote no to block the effort.
The CFPB rule, which took years to implement due to Wall Street opposition, covers any nonbank financial institution that sees at least 50 million transactions annually and is not a small business. In other words, simply accepting payment for a service would not trigger the rule, but if the app allows money to move from one party to another—as is the case with Google Pay, Apple Pay, Zelle, and others—then the app would be required to follow the relevant laws. The company formerly known as Twitter would be covered if it added such a service, as owner Elon Musk has signaled it intends to do. The same is the case with WhatsApp, which has similarly discussed allowing users to make such transactions. Meta CEO Mark Zuckerberg and Musk—who doubles as a White House employee—fought hard for the elimination of the CFPB.
The move by Senate Republicans to repeal the debanking rule is rich, given that alleged debanking by the CFPB was a major allegation leveled by oligarchs to argue on behalf of its elimination. The CFPB does not debank consumers for ideological reasons but instead has fought the practice.
“What it's designed to do is to make sure that we aren't foreclosing to people options that are available to them,” Republican Senate Majority Leader John Thune—specifically regarding “the crypto digital assets industry.”
Sen. Deb Fischer, a Nebraska Republican who narrowly avoided being upset in 2024 by an independent populist opponent, Dan Osborn, voted to move forward on the resolution. She told Drop Site News she is not concerned that repealing the rule would lead to conservatives being debanked.
Rep. Rick Scott, who oversaw the largest Medicare fraud in American history before becoming a senator from Florida, said he would support final passage of the repeal. “I support it,” he said. “I think it makes sense. I’ve gone through each of these. We’ve got to continue to look at all these regulations.”
Asked if he was worried conservatives would be debanked, he said, “I don’t think they will be.”
Sen. John Hoeven, a Republican from North Dakota, said that he supported repeal of the rule because the CFPB had pushed its authority too far. Asked if he was worried that conservatives could be debanked as a result, he said he wasn’t sure. “I guess I'm not familiar enough with that to know to answer,” he said, an hour before the vote.
Far-right activist Laura Loomer has been banned from many online payment systems due to her politics—including PayPal, Uber, and GoFundMe. “While CFPB is often partisan, it’s not wise to throw the baby out with the bath water,” Loomer wrote on Wednesday. “Republicans are now paving the way for more debanking in America. You can oppose the ideological bias of CFPB while also not voting to repeal consumer and free speech protections when we 100% have a monopoly in our country by Big Tech companies as it relates to payment services.”
In 2021, PayPal and the Anti-Defamation League announced a joint effort to fight “extremism and hate,” which the ADL routinely defines as criticism of Israel. Debanking a consumer for criticism of Israel violates non-discrimination laws, but with the CFPB rule repealed, PayPal and the ADL would more easily be able to do so.
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This report is confusing, largely because the history cannot be shoehorned into complex clauses that require prior knowledge of the history in order to unpack. In other words -- you have to tell the story in simple sentences, in chronological order, and then tell the story of what happened yesterday. Nothing else will do. First, the story about how Republicans whined that they were being "debanked" for their conservative politics, then how that was a lie. Then how they suddenly dropped all those lies and began campaigning to legalize debanking once Trump got into office. And it would also help to explain why this matters and how it will affect all of us. I really think a revised report is in order. This is important and this write up is comprehensible only if you already know much more about the history and the issue than is covered in the report. The average reader has no way of knowing much of anything about it and deserves a more fulsome, more carefully and cleanly written account. Please.
What exactly does this vote do? Are further steps required? Does this vote have the force of law?
What might it mean for payments made to Dropsite, or any other Substack, Patreon, Rumble, etc., news, and opinion sites?
I really want to see something more in depth about this concerning matter.