Financial groups back resolutions against CFPB's overdraft rule

Financial groups representing banks and credit unions have expressed support for Congressional Review Act resolutions aimed at overturning the Consumer Financial Protection Bureau's (CFPB) overdraft rule. Letters were sent to Senate Banking Committee Chair Tim Scott and House Financial Services Committee Chair French Hill, advocating against the rule initiated by former CFPB Director Chopra.

The letters argue that if implemented, the rule would end overdraft services crucial for consumers needing short-term liquidity. "If not invalidated, former Director Chopra’s final rule will effectively bring an end to overdraft services for consumers who have few, if any, other options for meeting short-term liquidity needs," they stated.

The financial groups emphasized that market-driven innovations had already led to significant consumer savings in recent years. They noted changes like low balance alerts and grace periods as proactive measures taken by financial institutions before the CFPB's proposal. According to them, these innovations resulted in a $5 billion reduction in overdraft fees from 2019 to 2022.

They further criticized the CFPB's rule for exceeding its statutory authority. "The rule goes well beyond the agency’s statutory authority," they argued, urging Congress to pass the disapproval resolution swiftly.

The Bank Policy Institute represents various banks operating in the United States and engages in research on regulatory topics while advocating on issues such as cybersecurity and fraud.

For further information or inquiries, contact Austin Anton at the Bank Policy Institute via email: austin.anton@bpi.com.