The Senate yesterday passed a resolution to repeal the Consumer Financial Protection Bureau’s recent rule capping overdraft fees, advancing a measure that would nullify the regulation before it takes effect.
🧠 Why it matters: The CFPB rule, finalized in December, would have significantly reduced the amount large banks and credit unions could charge for overdraft services — dropping fees from an average of $35 to as little as $5 per transaction. The agency estimated the rule would save consumers $5 billion annually.
🧾 The details:
- The Senate passed the resolution — S.J.Res. 18 — by a 52-48 vote. All Republicans except Sen. Josh Hawley [R-Mo.] voted in favor, along with a pair of Independents. All Democrats opposed it.
- The measure was brought under the Congressional Review Act (CRA), which allows Congress to overturn federal agency rules with a simple majority vote and without the possibility of a filibuster.
- The rule targeted very large financial institutions, aiming to eliminate what the CFPB called an “outdated overdraft loophole.” It was scheduled to go into effect October 1.
- A House companion resolution (H.J.Res. 59) was introduced in February by Rep. French Hill [R-Ark.], who chairs the House Financial Services Committee. The House is expected to consider the measure in the coming weeks.
🎙 On the record: In a floor speech the night before the vote, Sen. Tim Scott [R-S.C.], chair of the Senate Banking Committee who introduced the resolution, argued that capping overdraft fees would reduce access to banking services, particularly for low-income families. “Overturning the Biden CFPB’s overdraft fee structure is good for consumers,” Scott said. He cited a Federal Reserve Bank of New York study that found fee caps may hinder financial inclusion by reducing overdraft coverage and deposit supply.
💬 Opposition voices: Sen. Elizabeth Warren [D-Mass.], the Committee’s Ranking Member, criticized the move, writing “Senate Republicans would rather you didn’t find out they just voted to give the biggest banks billions in profits from overdraft fees that kick working people when they’re down.”
🗓 What’s next: For the resolution to take effect, it must now pass the House and be signed by the President. The White House has not yet signaled whether President Biden would veto the resolution if it reaches his desk.
📌 Catch up quick:
- The CFPB finalized the overdraft rule on December 12, 2024.
- It applied only to very large financial institutions, which account for the majority of overdraft fee revenue.
- The American Bankers Association, which is also challenging the rule in court, praised the Senate’s action, warning that the rule would push consumers toward higher-risk, less-regulated lenders.
