DCUC Applauds Congressional Efforts to Overturn CFPB’s Overdraft Fee Rule

​WASHINGTON, D.C. – The Defense Credit Union Council (DCUC) strongly supports the recent actions taken by House Financial Services Committee Chairman French Hill (R-AR) and Senate Banking Committee Chairman Tim Scott (R-SC) in introducing Congressional Review Act (CRA) resolutions to repeal the Consumer Financial Protection Bureau’s (CFPB) final rule capping overdraft fees for banks and credit unions. DCUC commends this critical effort to protect access to, and uphold responsible, essential financial services.

“DCUC applauds House Financial Services Chair French Hill and Senate Banking Chair Tim Scott for addressing this flawed rule, says Anthony Hernandez, DCUC President/CEO. “Consumers, particularly military and veterans, rely on robust overdraft protection programs not only as they organize, train, and equip to fight our nation’s wars, but especially when they are in harm’s way and cannot flex to keep bills on track back home. Without overdraft, late fees from utility companies, rental agreements, and other day-to-day expenses would become overwhelming.”

DCUC has been a vocal opponent of the CFPB’s overdraft fee rule, warning of its negative impact on credit unions and the communities they serve, especially those including military and veteran members. In December 2023, DCUC sent a letter to both committees and a letter to former CFPB Chairman Rohit Chopra outlining its concerns and voicing opposition to the late rule.

“While we share a commitment to ensuring that consumers are treated fairly, this rule represents a significant regulatory overreach that will harm both financial institutions and the members they serve. The imposition of a $5 cap on overdraft fees disregards the operational realities of financial institutions and the costs incurred in providing overdraft protection services. This policy not only jeopardizes the sustainability of these services but also shifts the financial burden back onto consumers in unintended ways. It risks creating a perverse incentive for individuals to overdraft their accounts more frequently, undermining the financial responsibility that overdraft policies are designed to encourage. Worse, without any safety net that would allow consumers to keep payments on time, this rule risks more decline rates due to nonsufficient funds. These can result in higher penalties from non-bank entities such as landlords, utility companies, and even municipalities.”

Rather than imposing punitive measures across the board, DCUC urged the CFPB to focus its enforcement actions on financial institutions that engage in predatory or abusive practices.

“Punishing responsible financial institutions harms consumers by reducing their access to affordable financial services and forcing them to turn to more costly alternatives.”

DCUC respectfully requested the committees oppose the CFPB’s overdraft fee rule and utilize the Congressional Review Act (CRA) to repeal the blatant overregulation and to ensure that future regulations are appropriately targeted and balanced to preserve access to financial services for all Americans.

Chairman Hill’s office announced the effort was joined by Reps. Bill Huizenga (R-MI), Ann Wagner (R-MO), Andy Barr (R-KY), Roger Williams (R-TX), William Timmons (R-SC), Ralph Norman (R-SC), Dan Meuser (R-PA), Byron Donalds (R-FL), Andy Ogles (R-TN), Maria Salazar (R-FL), Troy Downing (R-MT), Mike Haridopolos (R-FL), Tim Moore (R-NC), and Glenn Grothman (R-WI). Senators Mike Crapo (R-ID), Roger Wicker (R-MS), Jim Risch (R-ID), Jerry Moran (R-KS), John Boozman (R-AR), Thom Tillis (R-NC), Kevin Cramer (R-ND), Cynthia Lummis (R-WY), Bill Hagerty (R-TN), Katie Boyd Britt (R-AL), and Pete Ricketts (R-NE) cosponsored Chairman Scott's resolution.

Chairman Hill has stated, "Senate Banking Committee Chairman Tim Scott and I were clear when we told federal agencies – including the CFPB - to stop all midnight rulemaking, which former Director Chopra blatantly disregarded. As I have consistently said, the CFPB needs guardrails on its enforcement and rulemaking powers, and this rule is another clear example of why. The CFPB’s actions on overdraft is another form of government price controls that hurt consumers who deserve financial protections and greater choice. Our CRA will help overturn this harmful rule and is a next step toward ensuring the CFPB halts all ongoing rules until it answers to Congress, just like any other non-independent federal agency. Chairman Scott and I will continue to work with our fellow Republicans to rein in the agency with statutory direction."

Chairman Scott said, “The Biden Administration’s CFPB routinely targeted legitimate payment incentives and practices in pursuit of political headlines over sound policies. The overdraft rule was yet another example – many consumers rely on overdraft services to make ends meet and limiting this practice will push Americans to riskier financial products. I’m proud to lead the effort to overturn this misguided rule and protect Americans’ access to important financial services.”

DCUC thanks both congressional leaders as well as the bipartisan support from both chambers of Congress for their efforts in addressing and removing this harmful regulation. DCUC stands ready to support the Committees in developing more effective solutions that protect consumers without undermining the mission and integrity of America’s financial institutions.

For more information, please contact Jason Stverak at [email protected] and visit dcuc.org/advocacy.