Banks cash in as Republicans move to kill consumer protections

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By Stacy M. Brown
NNPA Newswire Senior National Correspondent
@StacyBrownMedia

(NNPA Newswire) – The Biden administration’s effort to rein in excessive overdraft fees is now under direct attack from congressional Republicans, who have launched a campaign to repeal the Consumer Financial Protection Bureau (CFPB) rule that would cap overdraft charges at $5. The move comes as the banking industry—one of Washington’s most powerful lobbying forces—pushes to preserve the estimated $8 billion in annual revenue it collects from these fees. 

Republicans introduced a Congressional Review Act (CRA) resolution of disapproval on Feb. 19, a legislative maneuver that cannot be filibustered and, if passed and signed into law, would wipe out the CFPB rule. The rule, finalized in December, was designed to prevent banks from exploiting consumers through excessive fees, a practice the agency found to be rife with deceptive tactics, including manipulating transaction orders to maximize overdraft charges.

“Republicans have introduced legislation to increase your bank fees,” former Transportation Secretary Pete Buttigieg wrote on X. “Seriously, they are doing this. And it sounds like the Trump administration supports it.” 

The American Prospect reported that Republicans in Congress have clarified who will gain from eliminating the rule. “The CRA has the support of key stakeholders, including the Consumer Bankers Association, Independent Community Bankers of America, American Bankers Association, and America’s Credit Unions,” Emma Janssen wrote for The American Prospect. These organizations are deeply entrenched in the banking industry, advocating for financial institutions rather than consumers—the Consumer Bankers Association lobbies on behalf of banks with more than $10 billion in assets. The Independent Community Bankers of America represents 5,000 smaller banks nationwide. The American Bankers Association, one of the largest lobbying groups in the country, has made preserving overdraft fees a key legislative priority. America’s Credit Unions, which claims to represent credit unions, has also sided with the banks in opposing the CFPB rule.

“It is extremely telling that the main stakeholders who want to get rid of the CFPB rule are bankers rather than regular Americans who use banks,” Janssen noted. 

The lawmakers leading the charge—House Financial Services Committee Chairman Rep. French Hill (R-Ark.) and Senate Banking Committee Chairman Tim Scott (R-S.C.)—both have deep financial ties to the banking industry. Hill’s top campaign donor last year was the Bank of New York Mellon, the 13th-largest bank in the country. Scott’s biggest contributor was Goldman Sachs. Hill, a former CEO of an Arkansas community bank, has a direct financial interest in preserving overdraft fees. At the same time, Scott has taken more than $5.3 million in campaign contributions from the financial services industry over his career, according to The Lever. 

“It’s up to Republicans to decide whether they will follow Hill and Scott and reveal themselves as objectively pro–junk fee by passing the resolution,” Janssen declared.

Republicans defending their move claim that removing the rule is about protecting “consumer choice.” Hill, in announcing the resolution of disapproval, said that the CFPB rule “ consumers who deserve financial protections and greater choice.” 

But as Janssen asserted, “What they call ‘choice’ is actually taking money away from consumers and giving it over to the banks, and it represents the dubious position that banks simply have to rip off their customers, or they cannot survive.” 

Lindsey Johnson, president and CEO of the Consumer Bankers Association, also tried to frame overdraft fees as a necessary tool for working-class Americans. “Millions of hardworking Americans, including the one in five without access to credit, rely on overdraft services as a valuable financial lifeline, yet the Biden-Chopra CFPB’s overdraft rule threatens to cut off their access to this essential bank product,” Johnson said. 

Janssen countered: “Hundreds of dollars in fees per family per year is far from a ‘valuable financial lifeline.’ If you’re going to sell out consumers to hand bankers billions of dollars, you might as well be honest about it.”