WASHINGTON—The CFPB’s proposed rule on overdraft fees will harm community-based credit unions and their members, America’s Credit Unions wrote to the agency.
The comments were sent in response to the CFPB’s proposal on overdraft services charged by financial institutions with more than $10 billion in assets.
The comments also come as 150 consumer and civil rights group have sent their own letters in support of the proposal (see related story).
“The proposed rule, with its singular focus on overdraft, ignores the interconnected nature of financial products and services and would only serve to harm or eliminate programs that consumers benefit from,” wrote America’s Credit Unions’ James Akin. “Furthermore, the proposed rule, in the guise of providing a benefit to consumers, would instead drastically reduce the ability of community-based credit unions to help their members in times of financial uncertainty and have widespread impacts on supposedly exempt credit unions and their members.
Proposal Should be ‘Rescinded’
“The Bureau should rescind the proposed rule and focus its efforts not on setting market prices, an authority the Bureau does not have, but rather on educating consumers and empowering community financial institutions to provide valued financial products and services,” he adds. “Alternatively, as credit unions represent such a small proportion of covered institutions and yet the exempt institutions would still be so seriously impacted, the CFPB should use its exemption authority to exempt all credit unions.”
Other Issues Raised
Among the many concerns, Akin and America’s CUs argued that:
- “Overdraft protection services serve an essential role for consumers to manage their finances and credit unions work with members to ensure these services are responsibly used.”
- “Applying Truth in Lending Act (TILA) and Credit Card Accountability Responsibility and Disclosure (CARD) Act provisions to overdraft is not viable for credit unions, and reducing fees to a breakeven amount would force covered credit unions to remove crucial services.”
- “The rule would impact exempt institutions, despite asset threshold, as small institutions with thinner margins would be more likely to reduce overdraft protection services.”
- The rule’s asset threshold is unprecedented and arbitrary and “seems designed solely to sidestep the necessary Small Business Regulatory Enforcement Fairness Act (SBREFA) process,” the letter reads
- The rule’s “de facto price cap” violates U.S. Supreme Court precedent against illegal regulatory takings
Now With Free Shipping! The CUToday.info Daily News Email Keeps Getting Better!
The biggest, best and freshest news reporting in credit unions remains free, and now has an added bonus---free shipping to your email address! That’s right. Each morning CUToday.info delivers its daily Fresh Today news update offering the latest headlines and breaking news right to your email, with the easy-to-read headlines format allowing you to click on the stories that interest you most in order to learn more. So stop paying those bank-fee-like subscription prices from other so-called “news” publications!
If you haven’t yet signed up for the new email solution on which CUToday.info has partnered with ResponseGenius, you can do so here. Signing up requires less than one minute of your time—and it’s free!
Please note that after signing up you may need to go to your Spam/Junk folder and mark the morning headlines email as safe. CUToday.info does not provide its list of readers and emails to outside parties, and we will not be contacting you to sell you an extended warranty or sending you any links so you may cash in on an inheritance.