Warren Slams Republicans for Moving to Overturn a CFPB Rule Limiting Overdraft Fees That Would Save Americans $5B A Year
Warren shares constituent stories about insidious overdraft fees, highlights how rule combats debanking
Washington, D.C. – U.S. Senator Elizabeth Warren (D-Mass.), Ranking Member of the Senate Committee on Banking, Housing, and Urban Affairs, joined fellow Senate Democrats to speak on the floor against the attempt by Senate Republicans to overturn a Consumer Financial Protection Bureau (CFPB) rule that saves hardworking Americans money by limiting bank overdraft fees.
Ranking Member Warren’s remarks below:
Mr. President, I want to thank the Senator from Connecticut for his work today in defending the Consumer Financial Protection Bureau and highlighting again the importance of this work from the CFPB to help level the playing field just a little between the billionaire banks and our hardworking service members and families that are living paycheck to paycheck. I also want to thank Senator Booker for coming here and talking about how people from New Jersey have been directly affected by overdraft fee abuses and appreciate his work on this.
President Trump and Republicans promised Americans that they would lower their costs of living. And instead, they’re now linking arms with some of the biggest banks in the country to impose billions of dollars in fees on working families.
Today, Republicans are voting to overturn a CFPB rule that prevents big banks like Bank of America, JP Morgan Chase, and Wells Fargo from saddling customers with hundreds of dollars in overdraft fees when a customer overdraws a checking account by only a few dollars.
Let’s be clear: this rule covers only the biggest banks, those with more than $10 billion in assets. Community banks are completely exempt from this.
All this rule does is ensure that overdraft fees are reasonable; under the rule, banks are allowed to recoup all of their costs, all of their losses associated with providing overdraft. That is typically under $5, which is why the CFPB’s rule generally caps overdraft fees at $5, but, if the bank can show that its costs are harder, then they can charge the full amount of their actual costs and losses. What the banks cannot do is play a game of gotcha in which the bank manipulates the customer’s account to hit the customer with hundreds of dollars in overdraft charges.
Today, a handful of other giant banks are charging about $35 a bounced payment, squeezing families for far more than what it typically costs to offer this overdraft. And the consumers carrying the vast majority of these fees are disproportionately low-income Americans, with the typical customer who gets caught by overdraft fees ending up paying more than $400 a year.
Now, $400 can be the cost of mortgage payment or rent for someone with a modest income. $400 can be the difference between getting their kid’s medication or just going without. $400 for some families can be several week’s worth of groceries. This money matters to millions of families.
Altogether, the CFPB rule saves American families up to $5 billion a year. Republicans claim they care about lowering costs. But overturning this rule will make big banks richer and hard-working families poorer.
The Republicans are deeply sympathetic—deep sympathetic to giant banks. They worry about poor little Wells Fargo. They shed a tear for JP Morgan’s extra billion dollars in profits that they make from overdraft fees—on top of the $27 billion they make in their other banking services. Yes, the Republicans worry about the giant banks and the $5 billion they would have to forgo if they only charged $5 for an overdraft fee.
Look, banks can survive with limits on overdraft fees. How do we know that? They’re already doing it. In fact, many banks, including Capital One and Citibank, have eliminated overdraft fees entirely, and they are still making billions of dollars in profits.
No, these fees are about kicking hard-working Americans when they are down.
My constituent April from Massachusetts shared this: “During the years of my life when money was always tight, nothing was more stressful than overdrafting my account by one dollar only to lose $35 due to overdraft. More than once, that additional $35 loss tangled up my budget for multiple paychecks or made the difference between getting groceries or not.”
Joan, also from Massachusetts, talked about how insidious these fees can be: “Several times when money was tight and I refilled my account a bit too late, I was charged an overdraft fee that then itself caused the next check to bounce, causing another fee. On top of that, there were daily fees because the overdraft charges kept me behind even as I added money to the account.”
To make matters even worse: these abusive, anti-consumer practices often target servicemembers and military families.
Last year, the CFPB ordered Navy Federal Credit Union to refund $80 million in illegal, surprise overdraft fees, which they had charged service members even when the service members’ accounts showed enough money to cover the transactions.
Cracking down on abusive overdraft practices, particularly when they harm servicemembers, has bipartisan support. A year ago, my then-colleague JD Vance and I launched an investigation into another credit union that had preyed on servicemembers with extortionate overdraft fees. And I hope to see the same kind of bipartisan concern now and support for the CFPB rule that puts a stop to this squeeze on military families.
And look finally, I just want to mention. I know that my colleagues on the other side of the aisle and this side of the aisle are concerned about debanking. Debanking is something that happens when a bank closes someone’s account without any real explanation. Overdraft practices have been the reason for tens of millions of account closures, shutting out far too many Americans from our banking system. So, for everyone who has concerns about debanking, consider that the CFPB rule eliminates one of the main excuses that banks have used for debanking their customers.
Look, our job is to lower costs for American families, not boost profits for giant banks. A vote against today’s CRA is a vote to protect those families and save them $5 billion dollars a year. I urge my colleagues to vote no.
Thank you Mr. President, and I yield the floor.
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