Californians Must Urge Congress to Support the Cap on Junk Overdraft Fees

LOS ANGELES, Dec. 13, 2024 — Consumers in California burdened by abusive overdraft fee practices will receive some relief after today’s announcement that the Consumer Financial Protection Bureau (CFPB) has finalized its overdraft rule. The rule will curb fees from $35 to $5, and save consumers $5 billion nationwide. 

The CFPB’s rule will prevent big banks from charging huge junk overdraft fees that burden families with hundreds of dollars a year while pushing people out of the banking system. The rule will promote straightforward, affordable forms of coverage protection. 

“Thanks again CFPB for standing up for consumers and standing up to financial institutions that gouge working families,” said Kevin Stein, Chief of Legal and Strategy at Rise Economy. “Consumers in California and nationwide are fed up with excessive fees as they strive to stabilize their finances. It’s good to know at least one agency is looking out for them.”

The CFPB action to protect consumers provides clear rules of the road to ensure consistency and clarity with overdraft products offered by the largest banks and financial institutions.

The new rule could face the threat of being overturned by Congress using the Congressional Review Act (CRA), however, which allows Congress, with the President’s approval, to overturn rules using expedited procedures and a simple majority vote and limited debate. 

Congress must protect this rule from industry actors. If big banks were to have their way,  consumers would lose protections they need to support their day-to-day finances. 

Additional information can be found here.

Contact: Brian M. Maxey, bmaxey@rise-economy.org

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