Lindsey Johnson, the president and CEO of the Consumer Bankers Association (CBA), said that certain government regulations proposed under the Biden Administration "will undoubtedly have far-reaching ramifications for consumers, banks, and the economy." Johnson made the statement in a RealClear Markets op-ed posted on August 16.
"Government research has clearly shown these regulations reduce consumers' access to financial services and drive up the cost of credit," said Johnson. "Unfortunately, this could result in the historic de-banking of low- and- moderate income Americans, forcing hardworking families outside of the well-regulated banking system to less safe, more expensive alternatives."
"While each of these rules on their own have significant implications for consumers, the cumulative impact of the hundreds of new rules proposed by the Biden administration will undoubtedly have far-reaching ramifications for consumers, banks, and the economy," she wrote. "De-banking is the real-life cost when regulators make policy based on short-term politics, rather than facts and data."
According to Johnson's op-ed, the Consumer Financial Protection Bureau’s (CFPB) proposal to cap credit card late fees at $8 may provide short-term savings for some consumers but could lead to increased costs for those who pay their bills on time. The CFPB acknowledges that nearly 74% of on-time payers might see higher costs due to the rule. For those who frequently pay late, the immediate savings could be offset by long-term financial consequences, such as higher borrowing costs or reduced access to credit for future purchases like cars or homes.
The Biden administration’s recent overdraft proposal and the Federal Reserve Board's rule on debit interchange fees, known as Regulation II, could result in higher costs for consumers and reduced availability of free checking accounts.
These changes "threaten to undo decades of progress that come as a result of consumers using the well-regulated banking system," disproportionately impacting low income individuals and middle class families, Johnson explained.
The Consumer Bankers Association is a trade association focused on retail banking, representing major retail banks in the United States. Established in 1919, the CBA collaborates with its members on policy issues, engages with regulatory agencies and legislators, and offers programs to educate future leaders in the banking industry.