Leading Financial Groups Commend Lawmakers for Taking First Step to Overturn Misguided CFPB Overdraft Rule

Senate Banking Committee Chair Tim Scott (R-S.C.)

​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 letters, 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 letters highlight 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 letters reiterate 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.”
 
Read more coverage from America's Credit Unions

To read the full letter to Chairman Scott, click HERE. To read the full letter to Chairman Hill, click HERE.

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