Overdraft Fees Back on the Menu? New Bill Could Kill CFPB's Lending Rule

This joint resolution throws out a new rule from the Consumer Financial Protection Bureau (CFPB) about overdraft lending at "Very Large Financial Institutions" (89 Fed. Reg. 106768). Basically, it's a direct challenge to the CFPB's attempt to regulate how big banks handle overdraft fees. The resolution disapproves of the rule rendering it invalid.

Overdraft Overhaul on Hold

The CFPB's rule was aimed at changing how the biggest banks deal with overdrafts. By killing this rule, the resolution essentially keeps things as they are, which means banks can continue with their current overdraft fee practices. For example, if you're a small business owner who accidentally overdraws your account while paying suppliers, you're still looking at the same potential fees as before - no new protections would be in place.

What's the Damage?

Without the CFPB's rule, there's no standardized update to how very large financial institutions handle overdrafts. This means if you bank with one of these giants, you won't see any changes to the existing overdraft policies. A student juggling tuition, rent, and book costs, for instance, could still get hit with multiple high overdraft fees if they miscalculate their balance. The status quo remains, and for many, that could mean facing steep charges for small mistakes.

The Bigger Picture

This move sidesteps the CFPB's attempt to bring more transparency and potentially lower costs to overdraft services. It also raises questions about what other consumer financial protections might be targeted next. If this resolution goes through, it could mean a green light for more challenges to rules designed to protect consumers' wallets.