(Alexandria, Virginia) — This morning Consumer Action for a Strong Economy (CASE) sent a letter to members of the House Financial Services Committee to voice support for Congressional Review Act (CRA) legislation recently introduced by Chairman French Hill (R-AR) that would overturn a banking regulation issued by the CFPB regarding overdraft fees in the waning days of the Biden Administration. Senator Tim Scott (R-SC), Chairman of the Senate Committee on Banking, Housing, and Urban Affgairs has introduced companion legislation in his chamber.
As the letter states, “While the rule purportedly protects consumers by lowering the cost of overdraft fees, the CFPB rule is a complete overreach beyond the agency’s given authority and would, in fact, lead to higher fees and reduced services across commercial consumer banking. An economic analysis further shows it would result in millions of lower-income Americans being unable to open a basic banking account, and also eliminate overdrafts as an option for consumers facing a short-term financial crisis, driving them to more risky and expensive financial options.”
CASE recently opened an issue-oriented FAQ page on the rule and why it needs to be eliminated, linked here. Among the reasons CASE urges the repeal of the Overdraft Rule:
- It erases options for Americans in a short-term financial crisis;
- The CFPB rule will block millions of Americans from opening a basic bank account;
- Compliance costs will be passed down from banks to consumers through higher fees;
- It will make short-term credit less accessible to consumers with less than perfect credit;
- The regulation will limit innovation and make banking more inconvenient;
- It encourages consumer account management practices that could expand personal debt.
In a final word to lawmakers, CASE urged, “The misguided CFPB overdraft rule is a form of government price control. It will deny overdraft services all together to the very consumers it was intended to help. Tell your Congressman to vote to overturn this disastrous bureaucratic overreach.”
