House poised to end Biden-era CFPB overdraft rule: CEI statement
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The House is expected today to vote on a Congressional Review Act (CRA) resolution overturning a Biden era Consumer Financial Protection Bureau rule to cap overdraft fees at $5 for banks and credit unions (over a certain threshold). CEI financial policy expert John Berlau urges the House to overturn this rule, explaining that such price controls would add to market volatility.
Statement by John Berlau, Director of Finance Policy:
“The U.S. House of Representatives must overturn the last-minute overdraft price controls from the Biden-era CFPB to prevent further financial volatility for middle-class consumers and many regional banks and credit unions. The rule, pushed out by the CFPB in December as part of a wave of last-minute regulations and edicts before Trump took office, would mandate price controls on overdraft fees at just $5 for customers of many banks and credit unions. This loss of revenue, particularly for midsize regional financial institutions, would likely result in other fees having to be raised and a loss of this service for consumers.
“Since 2010, federal rules have required banks and credit unions to have consumers ‘opt in’ to being charged overdraft fees in exchange for financial institution approval of a transaction exceeding the customer’s account balance. Many consumers choose this option for the convenience of not having a transaction declined. Now, however, banks and credit unions might stop offering this service because of this rule’s slashing of revenues. All consumers would likely face higher overall fees and fewer benefits due to the sweeping costs this rule will likely impose.
“As CEI’s Ryan Young has written, both tariffs and price controls impose tremendous costs on the working and middle-class Americans they are pitched as rescuing. Congress should overturn these proposed price controls of the CFPB and then overturn other interventionist policies causing financial damage.”
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