The U.S. House of Representatives passed a continued resolution to overturn the Consumer Financial Protection Bureau’s (CFPB) final rule on overdraft fees.
The resolution passed the Senate last month and now heads to President Donald Trump to sign into laws.
The overdraft rule closed a loophole that exempted overdraft loans from lending laws. The reforms would put a cap on bank overdraft fees. Specifically, they would allow large banks several options to manage their overdraft lending program. One, they can choose to charge $5; two, they can offer overdraft as a courtesy by charging a fee that covers no more than costs or losses; or three, they can continue to extend profit-generating overdraft loans if they comply with longstanding lending laws.
The CFPB said the rule would save consumers up to $5 billion in annual overdraft fees, or $225 per household that pays overdraft fees.
However, U.S. Sen. Tim Scott’s (R-SC), who offered the resolution, said it would harm consumers.
“As I’ve said repeatedly, the Biden-era CFPB overdraft rule would harm the very consumers it’s supposed to protect and limit access to credit and important financial services for hardworking Americans. I’m grateful to House Financial Services Chairman French Hill for his leadership on this effort in the House, and I look forward to President Trump signing this resolution and overturning this misguided rule once and for all,” Scott said.
On Feb. 13, Scott and House Financial Services Committee Chairman Rep. French Hill (R-AR) introduced the resolution.
The Consumer Bankers Association, the Independent Community Bankers of America, the American Bankers Association, America’s Credit Unions, and the Bank Policy Institute all support the resolution.
Proponents say the resolutions would preserve the choices that consumers have to a myriad of overdraft services that best meet their needs.
“Today’s House vote affirms what lawmakers, economists, and consumers have been saying for months: the Biden-Chopra CFPB’s overdraft rule is deeply flawed and harmful to the very people it claims to help. Both Chambers of Congress voting to overturn this onerous rule marks a significant victory for millions of Americans—especially the one in five without access to credit—who rely on overdraft services to pay for essentials and cover emergency expenses,” CBA officials said.
CBA called the CFPB rule an “illegal overreach” of the CFPB’s authority that would restrict consumer choice and undermine financial inclusion.
“We thank these Members of Congress for standing up for Americans who value the flexibility and protection overdraft services provide. We look forward to the resolution advancing to President Trump’s desk, where his signature would ensure that consumers can continue to access this important financial lifeline,” CBA officials said.