Restrictions on credit card rates and overdraft protection fees ultimately hurt the people they are meant to protect by limiting credit access and driving consumers to unregulated entities, Senate Banking Committee Chair Tim Scott (R-S.C.) and Consumer Financial Protection Bureau Acting Director Russell Vought said today.
Vought appeared before the committee for the second day of congressional hearings on the CFPB under his leadership. Republicans praised Vought for reigning in what they characterized as an out-of-control agency. Democrats alleged the acting director gutted the bureau to benefit businesses and harm consumers, releasing a two-and-a-half-page report before the hearing claiming that the Trump administration’s CFPB policy rollbacks have cost U.S. consumers $26.5 billion in additional credit card late fees and overdraft fees.
“One of the tools available to [President] Trump to keep costs low is the CFPB to turn money to American families when they have been cheated,” Ranking Member Elizabeth Warren (D-Mass.) said. “Instead of delivering help for people who have been scammed, Trump’s acting director of the CFPB, Mr. Vought, has attacked the agency.”
Republicans have instead pointed to a report released earlier this year by the White House Council of Economic Advisers finding the CFPB cost consumers between $237-$369 billion as financial institutions were forced to pass on their increased compliance and liability expenses to customers. In his opening remarks, Scott said that when price controls are in place, banks and creditors eliminate access.
“The fact of the matter is when you cap credit cards at 10%, what you ultimately do is you eliminate credit opportunities for those having a less than 750 credit score,” Scott said. “The vast majority of Americans have less than a 750 credit score, which means that they would ultimately have to go somewhere else other than a bank or regulated entity to find access to credit, which means they would be even in greater jeopardy.”
Vought was questioned about the CFPB’s decision to terminate a 2024 order requiring Federal Navy Credit Union to pay $95 million in refunds and penalties for allegedly charging “surprise” overdraft fees. He said the order was illegal and that “we want people to have overdraft protection.”
“If you’ve ever lived paycheck to paycheck, overdraft protection ensures that your check doesn’t bounce and you pay a worse fee because of it, and it’s often very embarrassing,” he said.
