(Reuters) -The U.S. Consumer Financial Protection Bureau has joined with industry groups in asking a federal court to scrap a Biden-era regulation barring consumer credit reports from including medical debt, according to court papers.
In a motion submitted on Wednesday in a Texas federal court, the CFPB joined two industry groups representing banks, credit unions and credit bureaus in asking a judge to strike down the rule, saying the CFPB had exceeded its legal authority and violated laws governing the crafting of regulations.
The rule is currently due to go into effect in June after the court issued a stay in February.
If approved by a judge, the move would undo a major policy plank championed by former Vice President Kamala Harris. Officials in the prior administration said it would remove up to $49 billion in medical debts from the credit reports of 15 million Americans.
In the United States, patients seeking medical treatment sometimes borrow to cover the cost because they either lack insurance or their plans require them to pay part of the cost.
Representatives for the CFPB, the Cornerstone Credit Union League and Consumer Data Industry Association, which had sued to block the rule, did not immediately respond to requests for comment.
CFPB finalized the rule on January 7 when President Joe Biden was still in office. It was due to take effect 60 days later, after President Donald Trump’s inauguration.
Among other far-reaching changes, Trump has worked to reverse much of the Biden administration’s marquee consumer safeguards.
Prior CFPB leadership said research showed medical debts, which patients do not incur out of choice, were poor indicators of borrowers’ ability to repay but could hinder consumers from accessing loans for cars, homes and small businesses.
However, the industry groups said the evidence did not support the CFPB’s decision, and the ban could leave them blind to important information about borrowers.
(Reporting by Douglas Gillison; editing by Pete Schroeder and Cynthia Osterman)
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