The Consumer Financial Protection Bureau’s (CFPB) proposed
rule on overdraft fees charged by banks and credit unions with more than $10
billion in total assets is being met with significant opposition from various
industry leaders.
Trade advocates argue the bureau is exceeding its statutory
authority under the Dodd-Frank Act and that the rulemaking is politically
motivated. Many also allege the proposal would do more harm than good for
consumers and the financial marketplace.
Below are comments from prominent executives from some of
the nation’s largest trade organizations representing depository institutions
that would be impacted by the rule if enacted:
American Bankers Association President and CEO Rob
Nichols: “The CFPB proposes to apply Regulation Z to overdraft services
offered by large banks above a ‘breakeven’ fee amount. The CFPB has no legal
authority to subject overdraft services offered by any financial institution to
Regulation Z, much less impose a price cap on the provision of these services
to consumers.
“The proposal also fails to fully acknowledge and
appreciate the significant voluntary changes many banks have already made to
their overdraft programs, including the growing availability of accounts that
do not charge overdraft fees, such as ‘Bank On’ certified accounts. The
proposal would upset this competitive market, restricting access to overdraft
with a government-imposed price cap.”
America’s Credit Unions President and CEO Jim Nussle:
“The CFPB has deliberately exceeded its intended purpose at the expense of
the hardworking Americans they claim to protect. Its latest overdraft fee
proposal is another devastating blow to working-class Americans as it takes
away a lifeline many consumers in financial distress rely on to make ends meet.
We have worked tirelessly to ensure our credit union members can provide the
services their members need when it comes to their financial planning and goals
when opting in to these products. The bureau must be held accountable for
its war on American families and Main Street America.”
Consumer Bankers Association President and CEO Lindsay
Johnson: “This proposal on overdraft price setting is just the latest in
a myriad of unnecessary and costly regulations by this administration that
seems guided by political polling, rather than by sound policy created by what
should be independent agencies. The aggregate costs and impacts of these
proposals on Americans’ access to essential financial products and services
have not been appropriately considered. This rulemaking and the Federal
Reserve Board’s recent proposal on debit interchange, for instance, could
dramatically reshape the economics of banking low-deposit consumers.”
Independent Community Bankers of America President and
CEO Rebeca Romero Rainey: “While ICBA and the nation’s community banks
continue reviewing the CFPB’s proposed rulemaking on overdraft services, we are
encouraged that it would exempt community banks with less than $10 billion in
assets. This critical exemption recognizes that community banks offer
specialized overdraft products and services that are not commoditized but
customized to meet the needs of their customers and local markets.
“As we review the rulemaking, ICBA will strongly advocate
tiered regulation for community banks over $10 billion in assets to mitigate
the impact of the rule on their customers and communities. Further, we continue
to urge policymakers to cautiously consider the impact of restrictions on
deposit account fees, which would have a negative ripple effect on customers
and businesses that rely on these services without addressing fees for missed
or late payments levied by merchants, utilities, landlords, and other payment
stakeholders.”
Read Dodd Frank Update's interview with CBA Vice President, Head of Policy Kelvin Chen, who previously worked for the CFPB, about several points of contension in the proposal.