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Floor Speech
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Mr. BLUMENTHAL. Mr. President, we are considering today S.J. Res. 28. That sounds highly technical, complex, and difficult to understand, and some may consider it so; but, in fact, it would have the very simple, straightforward effect of undoing a rule that is vital to protecting consumers. It would undo the Consumer Financial Protection Bureau's larger participant rule under the Congressional Review Act.
I think most people, by now, know about the CFPB, the Consumer Financial Protection Bureau, which is, in effect, the top cop on the beat of reviewing Big Banks' activities to prevent consumers from being cheated, scammed, and defrauded. It is under attack by the Trump administration and, of all people--surprise--Elon Musk. Elon Musk's attack on this rule is not coincidental, as I will explain in just a couple of minutes. To add insult to injury, our Republican colleagues are forcing a vote on this CRA to overturn the CFPB's larger participant rule, which protects consumers as big tech companies rush into offering financial services.
The big tech companies are getting into this business. Why? Because that is where the money is. This rulemaking allows the CFPB to supervise larger, nonbank companies that offer digital payment services, including peer-to-peer apps like Venmo or Cash App.
Again, it sounds complicated; but, really, at its core, it is very simple. It means that the CFPB can protect consumers on Venmo and other apps in the same way they do with banks. That is what the rule enables them to do. You are not a big bank, but consumers can still be protected if you fail in your duty to them. It is a commonsense measure to deter misconduct and protect consumers. If this CRA attempt is successful, it will undermine the CFPB's efforts to crack down on peer- to-peer fraud--apps which are misused or abused--and that fraud has surged in recent years.
To make it real, let me just tell you about my experience as chair of the Senate Permanent Subcommittee on Investigations. I opened an inquiry into the handling of scams and fraud on Zelle. Our investigation found that the level of reimbursement for fraud has dropped precipitously in the last 5 years, from 62 percent to 38 percent. What does that mean? Reimbursement for fraud has diminished hugely in the last 5 years, even though the rate of fraud has, probably, increased. In other words, peer-to-peer companies like Zelle are not returning money they are supposed to be giving back to people who are scammed on their app.
Not only are consumers who have already been harmed by fraud and scams on peer-to-peer payment platforms not seeing relief by rolling back the larger participant rule, the Trump administration is effectively telling tech companies that want to offer payments: Do whatever you want. The floor is yours. No one will be watching you. No one will be enforcing reimbursement if you permit fraud on your platform.
Now, just so everyone understands, requiring reimbursements provides a pretty strong incentive for any platform to police and prevent fraud. That is the reason reimbursements are important in a more general sense. Obviously, they are important to somebody who has been defrauded in that they want their money back, but the requirement that the platform provide reimbursements is a very strong and persuasive deterrent to lax and lackadaisical oversight by the platform itself. These platforms are speedy; they are quick; they are easy. It becomes speedy, quick, and easy to lose your money, and most of the payments are irreversible.
People watching at home may be wondering why Republicans are spending their time trying to roll back a commonsense rule that will empower the CFPB to protect everyday consumers from scams.
Well, like I was saying a little bit earlier, you don't have to look very far for the answer. As with most of the havoc wreaked by this administration in the last month, follow the money. It leads to Elon Musk. In January, Musk announced that he will be partnering with Visa to launch xMoney--a new venture that would provide X users with access to a mobile wallet and the ability to make peer-to-peer payments. So this new service, provided by X, would be, in fact, potentially subject to this rule and requirements for reimbursement that, of course, would check the laxity of oversight and force the kind of responsibility--it is really a responsibility to consumers--that these peer-to-peer platforms owe them morally. It ought to be a legal obligation, not just a moral one.
The value of X has dropped dramatically--another surprise since Musk purchased it 2 years ago with Fidelity--estimating the value has declined by nearly 80 percent. Now, seemingly, Musk is desperate to turn a profit on his investment in X. The CFPB, which Musk has attacked and now the administration is moving to shut down, will be one of xMoney's regulators--in fact, its key regulator. Given the spike in scams, bots, and hate speech on X since Musk purchased the site, one can only imagine how prevalent scams are likely to be on xMoney, especially with a diminished--or no--CFPB to regulate it.
I know ``regulation'' is becoming a dirty word, but think of it as protecting consumers, preventing fraud that may be irreparable when it occurs because consumers can't get their money back.
The larger participant rule, if it is not repealed, would authorize the CFPB to examine xMoney's books and records and look for illegal practices. The CFPB would be at X's door, asking for those records, overseeing their transactions, protecting consumers. No wonder Elon Musk doesn't like it. He is averse to transparency and disclosure as a matter of principle, and that is why he is trying to make ``regulation'' a dirty word.
Hence, while Elon Musk continues to ride roughshod over the CFPB, Senate Republicans are doing his bidding today. They are attempting to overturn the rule he doesn't like because it would require more disclosure, more transparency, more responsibility legally as well as morally from xMoney, his company.
When you come right down to it, it seems more simple than even I thought at the beginning of my talk here today. The CFPB, through rulemaking like the larger participant rule, protects consumers from fraud, scams, and financial abuse. Every attack on the CFPB--and we have seen a lot of them, including this one, the CRA--is an attack on commonsense consumer protection. It is designed to benefit the wealthy and well-connected, like Elon Musk, at the expense of everyday Americans. It takes away a protection to benefit Musk--already a multibillionaire--and xMoney and X, and it is at the expense of us, the everyday Americans.
I urge my colleagues today to vote against this attack on the CFPB and to vote no on S.J. Res. 28.
Again, it may seem complicated. Before I came to the floor today, I was meeting with some media executives--people extremely knowledgeable and financially astute--involved in major American corporations. I told them I was coming to the floor of the U.S. Senate to talk about the CFPB and the larger participant rule, and they looked at me as though I were from outer space.
Americans are unaware, and they will be unaware until xMoney starts hosting scams, frauds, bots, and they are cheated or defrauded. Then they will wonder: Why is there no protection? ``Why aren't you doing something?'' they will say to us in the U.S. Senate. I hope they will hold accountable my Republican colleagues--anyone who supports this CRA--because it will dramatically reduce the enforcement power of the CFPB and anyone else to help protect consumers from those frauds and losses of money, which they need now more than ever.
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