In a new letter sent to lawmakers in the House and Senate today, the American Bankers Association joined 52 state bankers associations in expressing strong support for the resolution of disapproval introduced by Senate Banking Committee Chairman Tim Scott (R-S.C.) and House Financial Services Committee Chairman French Hill (R-Ark.) that would invalidate the CFPB’s final rule on overdraft protection.
The associations noted that the rule will severely impact consumers’ access to a valued financial service for meeting unexpected expenses.
“If not invalidated, Director Chopra’s rule would lead banks to restrict, if not eliminate, access to overdraft, harming those consumers who have few, if any, other options for meeting short-term liquidity needs,” according to the associations. “The rule would do so even though analyses show that the average transaction that overdraws the customer’s account is in the hundreds of dollars. Not surprisingly, survey after survey show that consumers appreciate and value their institution’s overdraft program and are glad that their institution covered their overdraft payment, rather than returned or declined the payment.”
The letter also stressed that Congress should reject this clear example of the CFPB exceeding its statutory authority in a rule finalized by its former director.
“In the final days of his tenure, CFPB Director Rohit Chopra issued a final rule that goes well beyond the agency’s statutory authority,” the groups wrote. “Director Chopra’s final rule would apply TILA and Reg. Z to overdraft despite the fact that TILA’s definition of ’credit‘ unquestionably precludes this interpretation. Indeed, Director Chopra’s final rule reverses 55 years of consistent interpretation of TILA and Reg. Z by the agencies charged with enforcing it and the courts.”
ABA also joined the Consumer Bankers Association and other financial trade associations in a letter urging Congress to pass the resolution without delay.