On April 10th, the House passed a resolution to nullify the Consumer Financial Protection Bureau’s (CFPB) Overdraft Rule in a vote of 217-211. This decision comes just a few weeks after the Senate also passed the resolution, meaning that the nullification of the overdraft rule will be final upon the President’s approval and signature, which he is expected by all parties to give in the coming weeks.
The rule would have capped overdraft fees at $5 for credit unions with over $10 billion in assets as part of President Biden’s attempt to limit so-called “junk fees.” Credit union advocates argued that the rule was aimed instead at removing overdraft protection altogether, which is an essential service for low-income families, while supporters of the new rule maintained the fees only harmed these families more by capitalizing on their need for overdraft, citing the cost of the fees were excessive (but you can read more about the debate on overdraft here).
Since the announcement of the rule last year, credit union groups have been working to stop its implementation, with America’s Credit Unions and 18 state leagues filing legal challenges against it. In response to the resolution’s passing, America’s Credit Unions President and CEO Jim Nussle reiterated the agency’s support of overdraft protection and its belief that the CFPB has overextended its authority as of late.
“America’s Credit Unions supports using all tools available to pull back any overreach of the CFPB’s statutory authority. The bureau’s overdraft rule is a solution in search of a problem, an attempt to eliminate a product deemed ‘unsuitable’ by Washington bureaucrats but vital to many credit unions’ members,” said Nussle. “Credit unions are the original consumer protectors that are serving forgotten communities across the country. We appreciate the House’s action to stop regulatory overreach and preserve necessary financial products and services for hard-working Americans.”
Following the passing of the resolution in the Senate, the White House issued a statement of support for the move, which read, “This rule, issued as a midnight regulation in the final days of the previous Administration, would result in six million consumers facing higher fees and more bounced checks. It also limits consumer choice by depriving Americans of the option to choose overdraft services to meet short-term liquidity needs, forcing them into higher-cost financial products. Overturning this rule would advance this Administration’s deregulatory agenda.”
It’s unlikely that the CFPB will attempt to lay down any further rules on overdraft, NSF, or any other such fees during this administration as it aims at scaling back the organization’s authority and presence. With the issue of overdraft seemingly settled, all eyes turn back to the tax-exemption debate, which remains anything but.
