WSJ Editorial Board: Good Night to a Biden Overdraft Rule
The Senate nixes a price control on credit. Will the House follow?
Good Night to a Biden Overdraft Rule
Wall Street Journal
The Editorial Board
March 27, 2025
…The upper chamber on Thursday nixed a Consumer Financial Protection Bureau price control on overdraft fees, and now it’s up to the House to finish the job.
The Senate passed a resolution, 52-48, disapproving the CFPB overdraft rule. The Congressional Review Act allows Congress to scuttle rules with a majority vote within 60 days, along with the President’s signature…
All the other Senate Republicans understand that this price control will hurt the low-income Americans it is supposed to help. The rule effectively caps what banks can charge when consumers overdraft their checking accounts, at $5 per transaction, down from today’s $35 average. The agency dubiously styled such fees as loans, which are subject to more regulations.
As Republican Tim Scott of South Carolina, who sponsored the resolution, explained on the floor, the practical effect would be to reduce banking services that Americans sometimes need in a financial pinch. “When you start capping this fee structure,” Sen. Scott said, “you start eliminating overdraft.”
Sen. Scott cited a Federal Reserve Bank of New York study that found such caps “hinder financial inclusion” because “banks reduce overdraft coverage and deposit supply.” The rule would cause banks to drop overdraft protection and raise other fees, including on checking accounts. Lower-income folks would lose access to the banking system and perhaps have to pay more to get payday loans.
Many banks have already slashed overdraft fees to compete with fintech firms. But Biden CFPB director Rohit Chopra didn’t care since his goal was to expand political control over banks while pretending to stand up for consumers…
To read the full editorial, click here.
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