Senate votes to cancel Biden-era rule capping bank overdraft fees – Washington Examiner
The U.S. Senate has voted 52-48 to cancel a rule established during President Joe Biden’s administration that limited overdraft fees for large banks and credit unions.The resolution, introduced by Republican Senator Tim Scott, seeks to rescind a Consumer Financial Protection Bureau (CFPB) regulation that would cap these fees at $5, estimating potential consumer savings of $5 billion annually. Republicans have criticized the rule as government overreach and expressed concerns about its impact on overdraft services, which they claim are vital for many consumers. Senator Scott highlighted the importance of access to banking services, especially for lower-income individuals. While the resolution has passed in the Senate, a similar measure in the House awaits a full vote. The CFPB, often a target of Republican criticism, is currently led by an acting director.
Senate votes to cancel Biden-era rule capping bank overdraft fees
The Senate voted to cancel a rule finalized under former President Joe Biden that capped overdraft fees at large banks and credit unions.
The Senate voted 52-48 on Thursday to pass the joint resolution, introduced by Banking Committee Chairman Tim Scott (R-SC), that would rescind the Consumer Financial Protection Bureau rule. The resolution passed through the Congressional Review Act, a special legislative process to bypass the filibuster, allowing a simple majority vote in both chambers to cancel regulations.
Sen. Josh Hawley (R-MO) voted with Democrats against the measure.
The banking industry has opposed the rule, which would cap overdraft fees at just $5 for banks and financial institutions with more than $10 billion in assets unless the institutions opt for a fee that merely covers their own costs or treat the overdraft payment as a loan. The CFPB estimated that the rule would save consumers $5 billion a year.
Republicans have argued that the Biden-era CFPB targeted legitimate practices by banks. Republicans saw the rule as “midnight rulemaking,” given that it was announced in December when Biden was a lame-duck president.
Banking advocates have argued that the rule is an example of government overreach and could threaten overdraft services, which the Consumer Bankers Association described as a “valuable financial lifeline.”
“This overdraft conversation is a critically important conversation if you are like me, a guy who grew up in poverty, a single-parent household, who understands the difficulty, the challenge, of single moms making those ends meet,” Scott said on the Senate floor. “I want every single hardworking American to have access to our financial system.”
The Trump administration has worked to limit the power of the CFPB, which is now being led on an acting basis by Russ Vought, who concurrently serves as director of the Office of Management and Budget. Republicans have long opposed the CFPB.
House Financial Services Chairman French Hill (R-AR) introduced the companion resolution in the House, although it hasn’t yet received a full floor vote.
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In a statement, Hill blasted the CFPB under Biden, which was run by Rohit Chopra, an acolyte of Sen. Elizabeth Warren (D-MA), who is a major opponent of the banking industry.
“As I have consistently said, the CFPB needs guardrails on its enforcement and rulemaking powers, and this rule is another clear example of why,” Hill said. “The CFPB’s actions on overdraft is another form of government price controls that hurt consumers who deserve financial protections and greater choice.”
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