US EditionSenate overturns limit on bank overdraft fees
- The U.S. Senate voted 52-48 on Thursday to overturn a CFPB rule finalized in December that would have capped overdraft fees at $5 for large banks and credit unions, a measure intended to take effect in late 2025.
- The Biden administration, through the CFPB under Rohit Chopra, approved the rule in the months between the presidential election and inauguration day, aiming to limit what they considered excessive overdraft fees that disproportionately affect vulnerable communities and trap consumers in debt cycles.
- The Republican-backed resolution, sponsored by Senate Banking Committee Chairman Tim Scott, utilized the Congressional Review Act to bypass the filibuster and reverse the rule, with Republicans arguing that the CFPB targeted legitimate banking practices, while Democrats, like U.S. Sen. Raphael Warnock, opposed the measure, stating Republicans were siding with big banks over American families.
- Rob Nichols, President and CEO of the American Bankers Association, applauded the Senate's decision, while Patrick Woodall, managing director for policy at Americans for Financial Reform, criticized the vote as a betrayal of families and working people living paycheck to paycheck, with Saunders, associate director of the National Consumer Law Center, stating Senate Republicans voted to pad the profits of big banks.
- The resolution now heads to the House, where a parallel bill introduced by Representative French Hill has been approved by the Financial Services Committee, and while the CFPB estimated the rule would save consumers $5 billion a year, banking advocates claim it could force banks to eliminate overdraft protections, potentially driving consumers to less regulated and higher-risk non-bank lenders.
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Senate overturns limit on bank overdraft fees
The Senate voted Thursday to strike down a rule capping most bank overdraft fees at $5, a measure adopted late last year by the Consumer Financial Protection Bureau that had been expected to save Americans billions of dollars per year.
·Buffalo, United States
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Leaning Left9Leaning Right7Center11Last UpdatedBias Distribution41% Center
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