GOP Lawmakers Slam CFPB’s ‘Junk Fee’ Scrutiny at Overdraft Hearing

Rep. Blaine Luetkemeyer (R-Mo.) today rebuked the CFPB for its campaign against so-called “junk fees”—the bureau’s term for legitimate fees charged by banks and other financial institutions for the provision of financial products and services. “There is no legal authority for the CFPB to define the term ‘junk fee’ . . . and even less authority for the CFPB to act as a price setter in the consumer financial market,” Luetkemeyer said during a House Financial Services Subcommittee hearing on overdraft.

Pointing to the extensive number of disclosures banks are required to provide for various products and services—many of which were imposed by the bureau itself—Luetkemeyer added that “the CFPB is manufacturing a crisis about hidden fees for financial products and services when they are the very people that made up the disclosure regime,” and called the effort “another attempt by the CFPB to denigrate legally operating businesses by any means possible.”

Rep. William Timmons (R-S.C.) also criticized legislative efforts to curb banks’ ability to provide overdraft services—such as those outlined in the Overdraft Protection Act of 2021 introduced by Rep. Carolyn Maloney (D-N.Y.). Timmons noted that the bill, which would cap the number of overdraft fees that could be charged, would be “another onerous mandate for smaller financial institutions like community banks and credit unions, especially given that consumers already have to opt-in for overdraft protection and can opt out at any time.” He also cited recent ABA/Morning Consult data finding that nine in 10 American consumers value the overdraft protection offered by their bank.

Todd Zywicki, a law professor at George Mason University who testified at the hearing, also warned of potential negative consequences if policymakers do away with overdraft programs. He noted that new restrictions on overdraft could have wide-ranging negative implications for consumers, including “higher bank fees, higher minimum monthly deposits . . . and a loss of access to free checking.”