U.S. Sen. Bob Casey (D-PA) has expressed his support for a rule that would reduce excessive bank overdraft penalties.
The proposed rule by the Consumer Financial Protection Bureau (CFPB) would close a loophole that exempts overdraft lending services from longstanding provisions of the Truth in Lending Act. Under this rule, large banks would be free to extend overdraft loans if they complied with longstanding lending laws.
“Large corporate banks should be expected to provide their customers with transparent information about the services they offer and to charge fees that are in proportion to the actual costs the fees are covering. I believe that this proposed rule will be a positive step forward, and on behalf of Pennsylvania consumers, I strongly encourage CFPB to finalize the proposal as soon as possible,” Casey wrote in a letter to CFPB Director Rohit Chopra.
The CFPB estimates that this rule will save consumers $3.5 billion per year or $150 yearly per household that pays overdraft fees.
In January, Casey released a report that examines how big corporations are tacking on excessive fees at the tail end of everyday purchases, from internet plans to ATM withdrawals.
“As I discussed in my January 2024 report, junk fees are eating into families’ budgets. In this report, I laid out my priorities when it comes to combatting junk fees: (1) fighting deceptive practices that allow corporations to hide the fees they charge consumers; (2) preventing corporations from deceptively passing along their expenses to working families through bogus fees; and (3) protecting businesses that are honest about their pricing structures. CFPB’s efforts in this proposed rule to require banks to provide their customers with proper loan and credit disclosures and to cap overdraft fees at a realistic level meet these goals—and should be applauded,” Casey wrote.