While the American Bankers Association is engaging with banking regulators in constructive ways, it is also pushing back against a range of rulemakings and regulatory changes that will do more harm than good if enacted, and it is willing to go to court to fight those proposals, ABA President and CEO Rob Nichols said today at the Conference for Community Bankers in Orlando. Examples of potentially harmful regulation cited by Nichols include the FDIC’s plan to raise assessment fees and a joint agency rulemaking proposal to update the Community Reinvestment Act, a move that may disincentivize banks from serving low- to moderate-income communities. However, the association is most focused on the CFPB, particularly its recent proposal to limit credit card fees, he said.
“Under the leadership of Director [Rohit] Chopra, the CFPB has made repeated attempts to bully banks into curtailing or eliminating perfectly legal or legitimate fees for banking products and services,” Nichols said. “The bureau doubled down on this message in its proposal to dramatically curtail credit card late fees, erroneously dubbing them ‘junk fees’—rhetoric that was unfortunately echoed by President Biden during his State of the Union speech just last week. Make no mistake, this proposal will significantly affect the hundreds of banks in this country who issue credit cards and consumers.”
Suing federal regulators is never ABA’s first course of action, but that is what it did last year after CFPB made changes to its exam manual that dramatically expanded the agency’s UDAAP authority as established by Congress, he said. “Our lawsuit is intended to serve as a reminder to the broader regulatory community that ABA will not sit idly by when see such blatant overreach by an agency,” Nichols said. “We value our working relationships and engagement with our agency partners, but when an agency steps outside of the legal boundaries of its authority and seeks to impose obligations on banks that Congress never authorized, ABA will respond. We have sued the CFPB once and we’re prepared to do it again.”
Nichols also noted the recent changes in congressional leadership. With Rep. Patrick McHenry (R-N.C.) now chair of the House Financial Services Committee, bankers can expect closer scrutiny of the CFPB and other banking agencies, he said. Still, Congress is narrowly divided between the two parties, with new rules that will make it difficult to move legislation. These dynamics could come into play during a fight over raising the debt ceiling later this year. Refusing to raise the ceiling is not an option, Nichols said. “That doesn’t mean that lawmakers shouldn’t have a rigorous conversation about the federal budget and spending. Congress and the administration can and should do that without the self-inflicted wound of a debt ceiling standoff.”
