NEW YORK- The attorneys general from 24 states and the District of Columbia have sent a joint letter to the Consumer Financial Protection Bureau urging it to not roll back its decade-old rules that limits the ability of banks to charge overdraft fees when customers spend more than they have in their accounts.
In a letter to CFPB Director Kathy Kraninger the attorneys general, all of whom are Democrats, called the rule an “overwhelming success” that should not be watered down or scrapped.
As CUToday.info reported here, both credit union trade groups have expressed support for a dialing back of the rule.
‘In Harm’s Way’
“If the CFPB rolls back this rule, it would put hard-working people in harm’s way by allowing banks to charge more overdraft fees, all in the name of corporate greed,” New York Attorney General Letitia James said in a statement accompanying the letter.
Issued by the Federal Reserve Board in 2009, the overdraft rule requires banks, credit unions and other financial services companies to obtain permission before charging overdraft fees, typically around $35, that could sock customers with big penalties on even small purchases such as a cup of coffee.
"The CFPB leadership continues to put bank profits over people and gut critical protections that harm the most vulnerable New Mexican families," said New Mexico Attorney General Hector Balderas. "New Mexicans deserve a fair opportunity to participate in our financial system, and I will continue to fight these continued efforts to strip away protections and harm our families."
What the Data Show
The attorneys general noted the CFPB’s data shows that only about 16% of consumers have chosen to affirmatively opt into overdraft services under the Overdraft Rule, which has benefitted millions of Americans and led to a significant reduction in the total number and amount of overdraft fees.
In their letter, the Attorneys General specifically emphasized that there is no basis to believe that the Overdraft Rule would place any additional economic burden or cost on small financial institutions, and that compliance has both been straightforward and used a model form designed for simplicity and cost-savings. Inversely, the CFPB has not published any data or research to demonstrate any economic burden as a result of the Overdraft Rule.