ST. PAUL, Minn.–The Minnesota Bankers Association and Lake Central Bank have filed suit against the Federal Deposit Insurance Corp. over a rule the agency enacted in 2022 related to fees for non-sufficient funds, or overdraft fees.
As CUToday.info reported, last year the FDIC issued a new rule requiring banks to provide more detailed disclosures to customers regarding NSF fees.
“But the new lawsuit, filed in U.S. District Court in Minneapolis on Thursday, alleges the FDIC didn't have authority to change the rule, and didn't follow proper procedures regardless,” the Minneapolis-St. Paul Business Journal reported. “The MBA said it believes the Consumer Financial Protection Bureau is the entity that holds the authority for changing banking disclosures.”
As CUToday.info has also reported, the CFPB has been placing much greater scrutiny on fees of all types, including NSF fees.
‘Procedures Not Followed’
Because the proper rule making procedures were allegedly not followed, the lawsuit claims that banks such as Annandale-based Lake Central Bank did not have sufficient time to adjust to the rule before FDIC enforcement began, the report stated.
"The threat of enforcement against Lake Central is representative of the concern shared by thousands of banks across the country under the FDIC’s supervision, all of which have been impacted by the new regulatory mandates," the suit reads, the Business Journal reported.
The bank has approximately $200 million in assets and is asking for the court for declaratory and injunctive relief.
‘Regulators Must Comply’
“Banks must comply with hundreds of laws and regulations that govern their business. Bankers must be confident that their regulators comply with the laws that govern their operations, too,” Bryan Burns of Lake Central Bank said in the release quoted by the Business Journal.
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