Federal rule would harm consumers, conflict with Trump agenda, critics say

A forthcoming federal rule on open banking may allow banks to charge new fees for access to consumer data, a move critics say would harm consumers and runs counter to other parts of President Donald Trump's agenda. What is open banking? Open banking allows consumers to authorize banks and other financial institutions to securely share their financial data electronically with third-party providers. Why this rule now? The White House was reviewing the anticipated rule from the Consumer Financial Protection Bureau as of last week, according to reporting by Bloomberg Law. The rule would help shape the federal framework for open banking in the U.S., building on a broad provision contained within the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. Dodd-Frank was passed to enhance transparency and accountability and strengthen consumer protections in the financial industry after the economic crisis of 2008. The law is just under 850 pages long, and Section 1033 — which provides the legal basis for the open banking ecosystem that has evolved in the U.S. — was not one of its central provisions. Section 1033 is about one page long and it ensures that Americans have the legal right to access their own financial data upon request. Financial institutions must provide consumers' financial data relevant to the sought-after financial product or service in "an electronic form usable by consumers." The law gives the Consumer Financial Protection Bureau broad authority to define and standardize this process, which is partly why affected industries have anticipated federal rulemaking on open banking for more than a decade. The Biden administration issued the long-awaited rule in late 2024, which required banks to provide data directly to third parties authorized by consumers and prohibited banks from charging third parties fees for accessing the data, among other provisions. Banks pushed back, suing the bureau claiming it was exceeding the authority it was granted under Section 1033 and challenging those provisions in court. Banks have said the rule would require them to build and maintain costly interfaces for third-party access while preventing them from being able to recoup those costs. Last summer, JPMorgan Chase & Co. submitted proposed fees to data aggregators like Plaid for accessing Chase customers' financial data. The Trump administration has said the Biden administration's rule was unlawful, "arbitrary and capricious" and began working on a rewrite of the rule last August. The lawsuit is essentially paused until the new rule is released, and the court ordered that enforcement of the Biden rule be stayed. The Trump administration's version reportedly includes a provision that would allow banks to charge volume-based fees to fintech companies to access consumer financial data, meaning banks could begin charging fintech companies once they make more than a certain number of requests for customer data. Who pays the price? News that the Trump administration's rule would include a data-rationing provision prompted numerous objections from fintech companies and consumer advocacy groups, who argued that if banks didn't pay for the data sharing, consumers ultimately will. "Inevitably, if [the cost] is on the third party, it's going to go back to the consumer," said Todd Zywicki, a George Mason University law professor who formerly led a CFPB task force on federal consumer financial law and served in a leadership role at the Federal Trade Commission. A third party is really a false choice, according to Zywicki, and between consumers and banks, he thinks banks are the much better option. "The bank already has built-in incentives to collect the data, keep the data safely, use the data, and under law would already be required to share the data with consumers for them to be able to use it to shop for themselves," Zywicki told The Center Square, "To then say, OK, now you have to also let Plaid access my data or Mint access my data, so they can go find me a better savings account than recommended to me or suggests this product instead of that product just strikes me as the only way to really make sense on this." The five largest banks in the U.S. reported a record-worthy second quarter. JPMorgan reported its highest quarterly profit in history, Goldman Sachs had its best second quarter ever, and Citigroup enjoyed its best quarter in a decade. Bank of America also posted strong results, while Wells Fargo beat Wall Street expectations. Collectively, they brought in $49 billion in profits. Zywicki and other sources who spoke to The Center Square also maintained that banks have already done much of the work to build an open banking ecosystem and any costs they might incur to share data with more third parties would be relatively small. "Banks already are collecting and holding information securely… They've already got to share the information for free with the consumer. It's just a matter of whether a third party can get the information on behalf of the consumer," Zywicki added. But there's another cost to consumers that could be even greater than any immediate impact on their wallets, advocates warn, and that's the cost of continued fervent fintech innovation. "We have already seen the nation's biggest banks take advantage of regulatory ambiguity to impose fees and throttle access. Further uncertainty could stop the next great startup from forming and prevent consumers from accessing affordable financial products," said Miranda Margowsky, head of communications for the Financial Technology Association. Fintech innovation can do more than help consumers manage their finances. Startups like Carefull, a fintech company that analyzes customers' financial activity for unusual patterns, can help detect warning signs of dementia or cognitive decline, potentially years before a clinical diagnosis. "The goal here is to create a competitive framework where… small banks, for example, or fintech providers, or whoever can compete against the big banks that are currently holding the data," Zywicki said. "It's not really much of a fair playing field if banks can continue to use this information to market their [own] products." At odds with Trump's agenda Critics of a data tolling system have also said that allowing banks to charge for access to consumer data undermines several of the administration's other priorities and initiatives. Several advocacy groups submitted a joint letter to the administration in July saying that the proposal would violate the spirit of one of Trump's May executive orders that specifically calls for government regulation that promotes financial innovation. "The United States is a global leader in financial innovation, driven in part by the rapid growth of financial technology (fintech) firms," the order reads. "To foster this financial innovation, the Federal Government must update regulations…. and remove overly burdensome and fragmented regulations and supervisory practices that form barriers to entry and primarily benefit incumbent financial services firms." The president has also heavily promoted Trump Accounts, the government-backed, tax-preferred investment savings accounts for minors, as a way for ordinary American families to leverage financial tools more often used by wealthier individuals. Trump Accounts use Plaid to connect users' bank accounts to the platform, though users whose financial institutions are not supported can verify their accounts manually. The president has also been a vocal supporter of cryptocurrency and has advanced crypto-friendly policy. He and his sons founded World Liberty Financial, a financial platform that "bridges the gap between traditional banking and blockchain-powered innovation." But the Blockchain Association, a cryptocurrency industry trade group, doesn't support volume-based fees either. It was one of the organizations that signed onto the July letter, and it also wrote a letter to the CFPB in October. "The President's Working Group on Digital Asset Markets has entreated 'the Federal government to operationalize President Trump's promise to make America the crypto capital of the world.' Maintaining the broad permissions and prohibition of fees prescribed by the [Biden administration] Open Banking Rule is critical to realizing this goal and sustaining American leadership in fintech and blockchain for the century ahead," it wrote. What's next? The bureau's rewrite of the Biden administration's open banking rule is being reviewed by the White House Office of Information and Regulatory Affairs, according to Bloomberg. The bureau issued an advance notice of proposed rulemaking in August 2025, received public comments and drafted a proposed rule. Once the White House review is complete — potentially with changes — the bureau can issue a notice of proposed rulemaking. That proposal will also be subject to public comment before the bureau can issue a final rule. "It's really important to get this one right," Zywicki said. "When you get a regulation wrong, it's really hard to fix." The Center Square reached out to the Consumer Financial Protection Bureau, the Bank Policy Institute and multiple banks but did not receive a response in time for publication.