The American Bankers Association today joined 52 state bankers associations in expressing strong support for a resolution of disapproval introduced by Senate Banking Committee Chairman Tim Scott (R-S.C.) and House Financial Services Committee Chairman French Hill (R-Ark.) that would invalidate the Consumer Financial Protection Bureau’s final rule on overdraft protection.
The CFPB rule requires banks with at least $10 billion in assets to cap overdraft fees at $5 unless they voluntarily set a cap that covers their actual costs and losses or treat overdraft protection as a loan covered by the Truth in Lending Act. A Congressional Review Act resolution would overturn the rule if adopted by both the House and Senate and signed by President Trump.
In a letter to lawmakers, the associations said the rule would lead banks to restrict or eliminate access to overdraft services, “harming those consumers who have few, if any, other options for meeting short-term liquidity needs.”
“The rule would do so even though analyses show that the average transaction that overdraws the customer’s account is in the hundreds of dollars,” they said. “Not surprisingly, survey after survey shows that consumers appreciate and value their institution’s overdraft program and are glad that their institution covered their overdraft payment, rather than returned or declined the payment.”
The letter also urged Congress to reject what the groups said was a clear example of the CFPB exceeding its statutory authority.
In related news, ABA also joined three national associations representing banks and credit unions in voicing support for the resolution. “The rule goes well beyond the agency’s statutory authority, reversing 55 years of consistent interpretation of the Truth in Lending Act and Regulation Z by the agencies charged with enforcing the statute and by the courts that have ruled on its scope,” the associations said.
