Leading financial groups that represent banks and credit unions of all sizes today sent letters Senate Banking Committee Chair Tim Scott (R-S.C.) and House Financial Services Committee Chair French Hill (R-Ark.) in support of their respective Congressional Review Act resolutions to invalidate the Consumer Financial Protection Bureau’s (CFPB) overdraft rule.
As outlined in the letter, if former CFPB Director Chopra’s rule that imposes government price controls on overdraft services were to take effect, it would negatively impact millions of consumers who value this financial lifeline:
“If not invalidated, former Director Chopra’s final rule will effectively bring an end to overdraft services for consumers who have few, if any, other options for meeting short-term liquidity needs, all to advance the prior administration’s political campaign against ‘junk fees.’”
Moreover, the letter highlights how the rule ignores the market realities of bank-led innovations that have resulted in billions in consumer savings over the last several years:
“Before the CFPB released its overdraft proposal, many financial institutions had proactively made changes to their overdraft programs to reflect competitive developments within the industry. These innovations include sending low balance alerts, imposing a de minimis threshold triggering an overdraft fee, capping total fees that the bank may charge per day, and providing overdraft “grace periods” during which a customer can make a deposit and avoid a fee.”
“The CFPB’s own data shows that there was a $5 billion reduction of overdraft fees from 2019 to 2022 because of these financial institution-led – not government-led – innovations, a nearly 50 percent drop since before the pandemic. More recently announced changes to overdraft programs are projected to save consumers $18.3 billion from 2021 through 2025, more than $3.5 billion per year.”
Finally, the letter reiterates how former Director Chopra’s rule goes far beyond the CFPB’s statutory authority:
“The rule goes well beyond the agency’s statutory authority, reversing 55 years of consistent interpretation of the Truth in Lending Act and Regulation Z by the agencies charged with enforcing the statute and by the courts that have ruled on its scope. We urge Congress to pass the disapproval resolution without delay.”
To read the full letter to Chairman Scott, click HERE. To read the full letter to Chairman Hill, click HERE.
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About the American Bankers Association
The American Bankers Association is the voice of the nation’s $24.2 trillion banking industry, which is composed of small, regional and large banks that together employ approximately 2.1 million people, safeguard $19.1 trillion in deposits and extend $12.6 trillion in loans.
About Bank Policy Institute
The Bank Policy Institute is a nonpartisan public policy, research and advocacy group that represents universal banks, regional banks and the major foreign banks doing business in the United States. The Institute produces academic research and analysis on regulatory and monetary policy topics, analyzes and comments on proposed regulations, and represents the financial services industry with respect to cybersecurity, fraud, and other information security issues.
About the Consumer Bankers Association
The Consumer Bankers Association represents America’s leading retail banks. We promote policies to create a stronger industry and economy. Established in 1919, CBA’s corporate member institutions account for 1.7 million jobs in America, extend roughly $4 trillion in consumer loans and provide $275 billion in small business loans annually. Follow us on Twitter @consumerbankers.
About America’s Credit Unions
America’s Credit Unions is the unified voice for not-for-profit credit unions and their more than 140 million members nationwide. America’s Credit Unions provides strong advocacy, resources and services to protect, empower and advance credit unions and the people and communities they serve. For more information about America’s Credit Unions, visit AmericasCreditUnions.org.