Trump Signs Resolution to Nix CFPB Overdraft Rule

The move overturns the bureau’s effort to cap overdraft fees at $5. The American Bankers Association also dropped its lawsuit regarding the rule.

President Donald Trump signed a resolution Friday to overturn the Consumer Financial Protection Bureau’s final rule that would have capped, at $5, the overdraft fee that banks and credit unions with more than $10 billion in assets could charge.

“The Biden administration’s ill-conceived rule imposing new price controls on overdraft services … harmed the very consumers the CFPB is supposed to protect,” Sen. Tim Scott, R-SC, said in a statement Friday. “The rule would have reduced access to credit and important financial services and resulted in more unbanked Americans.”

The CFPB rule would have taken effect in October.

Scott, the chair of the Senate Banking Committee, led the push to roll back the CFPB rule through the Congressional Review Act, which permits lawmakers to overturn federal regulations within 60 days after they’re issued. But for rules issued less than 60 days before the end of a congressional session, that window resets when a new Congress convenes. The CFPB issued its overdraft rule in December.

Trump’s sign-off closes the loop on the overdraft question. Former CFPB Director Rohit Chopra, who announced the rule last year, arguably threw shade in April for the pace at which the Trump administration was moving.

The Senate voted in March to overturn the rule, and the House followed suit two weeks later. But a month passed before Trump signed the resolution.

“Weirdly, the president hasn’t signed it yet,” Chopra said in an appearance during the intervening time, suggesting a lack of clear communication between lawmakers and the president.

Trump on Friday separately signed a resolution overturning another late Biden-era CFPB rule that would have let the agency’s examiners determine whether digital payment providers processing at least 50 million transactions each year complied with the Electronic Fund Transfer Act and other consumer protection laws.

In a statement Friday, Rep. French Hill, R-AR, called the overdraft and larger participant rules “undemocratic and unjustified actions.”

“Both rulemakings were rushed out the door in the darkness of night in the waning hours of the Biden-Harris Administration,” said Hill, the House Financial Services Committee chair. “Americans voted for consumer choice, not government overregulation. By overturning these two rulemakings, we are returning decision-making power where it belongs: with the American people.”

A $5 blanket fee is just one option financial institutions could have chosen as an alternative to the fees they charge when customers overdraw their accounts.

Courtesy of Dan Ennis, Banking Dive