Rep. George Whitesides called out Congressional Republicans’ extreme resolution that would allow big banks to take advantage of working families through their predatory overdraft practices.

“This so-called resolution passed yesterday by my colleagues penalizes working families, military families, and all those living paycheck to paycheck in favor of giving a handout to big banks,” said Rep. George Whitesides. “Before the CFPB cracked down on predatory banking practices, overdraft fees cost everyday families hundreds of dollars a year. Let’s be clear who this hurts – hard working Americans who don’t have a cushion in their bank account. Instead of working to lower costs, House Republicans are removing protections from those who need it most.”

 In December 2024, the Consumer Financial Protection Bureau (CFPB) closed an outdated overdraft loophole that allowed banks with over $10 billion in assets to charge consumers excess amounts in overdraft fees and interest. Approximately 23 million households pay overdraft fees every year, and CFPB’s rule is estimated to save one-in-five households a total of $5 billion each year.

Some of the most concerning elements of the bill include:

Increasing bank fees for servicemembers and veterans:

• Nearly 80% of military families used checking accounts, and the CFPB’s overdraft fees rule saves roughly one in-five households that pay overdraft fees amounting to around $225 each year.
•  Servicemembers have filed CFPB complaints over unfair or deceptive overdraft practices that have imposed unaffordable fees. The CFPB previously took an enforcement action against Navy Federal Credit Union for inappropriate overdraft fees, requiring the credit union to repay $80 million to harmed customers, largely servicemembers and veterans. 
• Repealing CFPB’s rule will only expose servicemembers to excessive overdraft fees when they can least afford them.

Allowing big banks to charge excessive fees and encourage related exploitative practices:

• Most debit card overdrafts are repaid within 3 days and are used to cover transaction amounts that are less than $26, which is less than the average overdraft fee that is charged.
•    Banks have been found to have manipulated the order of transactions to maximize fees or charged consumers overdraft fees even when their account had sufficient funds.

Undermining efforts to combat junk fees that raise the cost of living:

•   In 2022, the CFPB launched an initiative to eliminate and reduce junk fees, which are inflated, hidden, or back-end fees that cut into consumers’ savings.

•   Additionally, the CFPB issued guidance in October 2023 to implement Section 1034(c) of Dodd-Frank, which generally prohibits large banks and credit unions from charging fees to provide basic account information to a consumer when they request it.

•   In late May 2024, the CFPB initiated a public inquiry into the mortgage closing costs related junk fees, reporting that median total loan costs for a home mortgage increased by more than 36% from 2021 to 2023. The agency was searching for methods to reduce anticompetitive fees that harm homebuyers and lenders.
  
  

 Unfortunately, the industry and Congressional Republicans have fought back against many of these efforts to enrich megabanks that already are making record profits, like JPMorgan Chase making a record $58.5 billion last year.

  Passing this rule opens the door for additional consumer protection to be rolled back under current leadership.

Ed. Note: The above information was provided to KHTS by Rep. Whitesides

KHTS FM 98.1 and AM 1220 is Santa Clarita’s only local radio station. KHTS mixes in a combination of news, traffic, sports, and features along with your favorite adult contemporary hits. Santa Clarita news and features are delivered throughout the day over our airwaves, on our website and through a variety of social media platforms. Our KHTS national award-winning daily news briefs are now read daily by 34,000+ residents. A vibrant member of the Santa Clarita community, the KHTS broadcast signal reaches all of the Santa Clarita Valley and parts of the high desert communities located in the Antelope Valley. The station streams its talk shows over the web, reaching a potentially worldwide audience. Follow @KHTSRadio on Facebook, Twitter, and Instagram.