Congress Revisits CFPB Limits Amid Insurance Oversight Concerns
Washington, July 30, 2025 — Congress is once again scrutinizing the authority of the Consumer Financial Protection Bureau (CFPB), with a new push to limit its oversight of insurance-related activities, reigniting debates over federal versus state regulatory roles. The Business of Insurance Regulatory Reform Act, reintroduced by Rep. Bryan Steil (R-Wis.) in the House and backed by Sen. Joe Manchin (D-W.Va.) and Sen. Tim Scott (R-S.C.) in the Senate, seeks to explicitly bar the CFPB from regulating entities already under state insurance oversight, even when they offer consumer financial products.
Background and Legislative Push
The CFPB, established under the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, is tasked with protecting consumers from unfair, deceptive, or abusive financial practices. However, Title X of Dodd-Frank explicitly excludes the “business of insurance” from the CFPB’s jurisdiction, reinforcing the McCarran-Ferguson Act of 1945, which grants states primary regulatory authority over insurance. Despite this, trade groups argue that the CFPB has overstepped by targeting state-regulated insurance entities, creating duplicative and conflicting regulations.
The proposed legislation aims to clarify and enforce these exemptions, ensuring that state insurance regulators maintain sole authority. Major industry groups, including the American Council of Life Insurers (ACLI), the National Association of Mutual Insurance Companies, and the Independent Insurance Agents and Brokers of America, have endorsed the bill, citing the effectiveness of state-based consumer protections. A joint letter to Congress emphasized that the act would “create certainty for insurers, agents, and consumers” by preventing federal overreach.
Bipartisan Support and Industry Backing
The bill has garnered bipartisan support, with Sen. Manchin framing it as a necessary clarification to maintain the CFPB’s original scope while preserving state authority. The Defense Credit Union Council (DCUC) also voiced support, urging Congress to pass the measure to protect state-regulated entities from federal overreach. On the other hand, critics like Rep. Maxine Waters (D-Calif.) have called for increased oversight of the CFPB, arguing that limiting its authority could weaken consumer protections, particularly for vulnerable populations.
Broader Context: CFPB Under Fire
The renewed focus on CFPB limits comes amid broader challenges to the agency. Since February 2025, the Trump administration has sought thwarted the agency’s operations, suspending services and attempting to fire over 1,400 employees, though a federal judge temporarily blocked these layoffs. The administration’s actions, including a halt on enforcement and supervision, have raised concerns about a “significant gap” in financial oversight, particularly for low-income consumers reliant on protections like payday loan regulations.
Recent CFPB rules, such as a $5 overdraft fee cap for large banks and regulations requiring digital payment apps like PayPal and CashApp to follow banking rules, face potential repeal by Congress under the Congressional Review Act. These developments have heightened tensions over the agency’s future.
Implications and Outlook
Proponents of the reform act argue that state insurance regulators, with their long-standing track record, are better equipped to protect consumers without federal interference. Critics, however, warn that curbing the CFPB’s authority could leave gaps in oversight, especially for financial products intertwined with insurance. The Supreme Court’s 2024 ruling upholding the CFPB’s funding structure as constitutional has bolstered the agency’s position, but ongoing legal and political battles suggest its role remains contentious.
As Congress debates the bill, the outcome will shape the balance between state and federal regulation, with significant implications for insurers and consumers. For updates, follow developments on X or visit congress.gov.