"The open banking regulatory space has been in flux for some time. In 2023, CFPB's first proposal to implement Section 1033 signalled that some clarity may be on the horizon. But even then, the rifts between banks and fintechs was clear: Fintechs saw CFPB's move as a positive step forward for competition. Banks, on the other hand, characterized the rulemaking as short-sighted, a law that was likely to move the brunt of responsibility on the bank if things went wrong."
"Under the Biden administration, the CFPB was moving aggressively against big banks. Ever since the Trump administration gutted and restructured the Bureau, however, the CFPB has backtracked on multiple lawsuits against big banks, including one against JPMorgan Chase, Wells Fargo, and Bank of America over allegations of fraud involving the Zelle P2P payments network. This theme carries over to the Open Banking rulemaking as well. The CFPB under Trump retracted the proposed rulemaking and deemed it "unlawful". It gave the following reasons for doing so:"
Open banking regulation remains unsettled after the CFPB's 2023 Section 1033 proposal revealed competing priorities between banks and fintechs. Fintechs regarded the proposal as pro-competition, while banks warned it was short-sighted and likely to shift liability onto banks. Political changes affected enforcement posture, with the CFPB pursuing big banks under one administration and retracting rulemaking under another. The retraction argued lack of authority to regulate the entire banking system, criticized fee prohibitions that burden data providers, and warned that expanded data-sharing would increase consumer privacy and security risks.
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