Tierney Cross via Bloomberg via Getty Images
What you need to know
- In a lawsuit filed by other parties, a group of banking professionals has sued the Consumer Financial Protection Bureau to block its plan to cap most overdrafts at $5.
- The suit is the latest move in a running battle between banks and regulators as the Biden administration pursues a war on "junk fees."
- Overdraft fees are seen as a threat to financially fragile customers by the bank.
Banking industry is suing to prevent a proposed regulation capping most overdrafts at $5.
Community Bankers Association and other groups sued Consumer Financial Protection Bureau, in Federal Court in Mississippi on Thursday. They sought to challenge a rule that was finalized by the Bureau earlier that day. This rule is set to take effect in October and would prohibit large banks from charging customers fees – usually between $30 to $35 if they withdraw money that’s not on their account.
Overdraft fees are characterized by the bureau as “junk fees” It is a way to extract cash from families who live on a tight budget. This article cites a study that shows the majority of overdraft fees go to those who are on low incomes and have incurred them multiple times.
Banking industry claims that customers enjoy the security of having more credit than they have in their accounts when there is no other available credit.
“The CFPB’s rule on overdraft services harms Americans who need it most—including the 26 million Americans who don’t have access to credit and thus stand to lose the most if overdraft services are restricted,” CBA’s CEO Lindsey Johnson stated in a recent press release.
Challenging CFPB's Authority, and Existence
In its lawsuit, the group alleges that the Bureau exceeded its authority when it created the rule. After the Great Financial Crisis, the banking watchdog was created.
The suit is part of a larger battle that has been raging between banks and financial institutions over so-called junk fees. A previous lawsuit resulted in courts temporarily blocking a CFPB regulation that limited credit card late charges to $8.
In January, Republicans who are long-time opponents of the CFPB will take control in Washington. Elon Musk, Trump’s advisor and billionaire Elon called. “Delete” The Bureau earlier this year called it redundant.
Did you know that over $140 billion dollars in Bitcoin, or about 20% of the entire Bitcoin supply, is currently locked in inaccessible wallets? Or maybe you have lost access to your Bitcoin wallet? Don’t let those funds remain out of reach! AI Seed Phrase Finder is here to help you regain access effortlessly. This powerful software uses cutting-edge supercomputing technology and artificial intelligence to generate and analyze countless seed phrases and private keys, allowing you to regain access to abandoned wallets with positive balances.
