Smith Collection/Gado/Sipa USA via AP Images
As predicted, Republicans in Congress are going after a Consumer Financial Protection Bureau (CFPB) rule that protects consumers from predatory overdraft fees that can cost hundreds of dollars a year. Lawmakers introduced a Congressional Review Act (CRA) resolution of disapproval on Wednesday that, if passed and signed by the president, will reverse the rule and hand a win to banks.
Because CRA resolutions cannot by stopped by a filibuster, they represent some of the most likely legislative actions of the early Trump term.
The rule under challenge places a $5 cap on the overdraft fees that banks can charge their customers, a major decrease from the typical $35 fee. In the rulemaking process, the CFPB found that some banks scheme and scam to maximize overdraft fees, setting new rules without notifying customers or even engineering the order of transactions to generate more fees. Capping these fees will rein banks in, and according to the CFPB’s calculations, save Americans $5 billion a year.
The rule was finalized last December and was scheduled to become effective in October. Because of acting director Russ Vought’s unlawful order stalling all CFPB work, the effective date has been suspended. But if Congress passes the CRA resolution, the overdraft rule could not come back in any “substantially similar” form. So it matters if congressional Republicans decide to support allowing banks to impose additional junk fees worth billions of dollars.
If it wasn’t already clear who would benefit from overturning this CFPB rule, the Republicans spell it out themselves in an announcement: “The CRA has the support of key stakeholders, including the Consumer Bankers Association, Independent Community Bankers of America, American Bankers Association, and America’s Credit Unions.”
Here’s a brief biography of these “stakeholders.” The Consumer Bankers Association lobbies for U.S. banks that have more than $10 billion in assets. Independent Community Bankers of America lobbies on behalf of 5,000 smaller banks across the country. The American Bankers Association is a massive lobbying organization that represents banks of all sizes; they list preserving overdraft fees as one of their key legislative priorities. America’s Credit Unions represents credit unions.
This list of supporters is far from surprising, but it is extremely telling that the main stakeholders who want to get rid of the CFPB rule are bankers, rather than regular Americans who use banks.
What’s more, the two legislators spearheading the overturn, House Financial Services Committee Chairman French Hill (R-AR) and Senate Banking Committee Chairman Tim Scott (R-SC), are in the pocket of big banks themselves. Hill’s top funding contributor last year was Bank of New York Mellon, the 13th-largest bank in the country, while Scott’s was Goldman Sachs. Hill is himself the former CEO of a community bank in Arkansas. As The Lever reported, Scott has received more than $5.3 million in campaign funds from the financial services industry over his career.
It’s up to Republicans to decide whether they will follow Hill and Scott and reveal themselves as objectively pro–junk fee by passing the resolution.
When justifying overturning rules that regulate big-bank greed, Republicans and lobbyists say that they’re merely trying to protect consumer choice. Rep. Hill, announcing the resolution of disapproval, said that the CFPB rule “[hurts] consumers who deserve financial protections and greater choice.” What they call “choice” is actually taking money away from consumers and giving it over to the banks, and it represents the dubious position that banks simply have to rip off their customers or they cannot survive.
Meanwhile, the president and CEO of the Consumer Bankers Association, Lindsey Johnson, pretends to care about the well-being of working-class Americans: “Millions of hardworking Americans, including the one in five without access to credit, rely on overdraft services as a valuable financial lifeline, yet the Biden-Chopra CFPB’s overdraft rule threatens to cut off their access to this essential bank product.”
Hundreds of dollars in fees per family per year is far from a “valuable financial lifeline.” If you’re going to sell out consumers to hand bankers billions of dollars, you might as well be honest about it.
