House Financial Service Committee Chair French Hill and Senate Banking Committee Chairman Tim Scott have introduced Congressional Review Act (CRA) resolutions to overturn the Biden Administration’s Consumer Financial Protection Bureau’s (CFPB) final rule capping overdraft fees at banks and credit unions. The committee leaders cited the rule’s impact on access to important financial services and reiterated that lawful and contractually agreed upon payment incentives promote financial discipline and responsibility.
“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 [Rohit] Chopra blatantly disregarded,” said Chairman Hill. “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.”
The CFPB’s final rule makes several key updates to federal regulation governing overdraft fees for financial institutions with more than $10 billion in assets. These institutions would have to choose one of the following options when charging for overdrafts:
- Cap their overdraft fee at $5: Under this simple option, covered banks and credit unions could simply cap their fee at $5, which is the estimated level at which most banks could be able to cover their costs associated with administering a courtesy overdraft program.
- Cap their fee at an amount that covers costs and losses: For banks that wish to offer overdraft as a convenient service rather than as a profit center, the final rule allows financial institutions to set their fee at an amount that covers their costs and losses.
- Disclose the terms of their overdraft loan just like other loans: For financial institutions that wish to profit from overdraft lending, they may do so by complying with the standard requirements governing other loans, like credit cards. This would include giving consumers a choice on whether to open the line of overdraft credit, providing account-opening disclosures that would allow comparison shopping, sending periodic statements, and giving consumers a choice of whether to pay automatically or manually.
The CRA has the support of key stakeholders, including the Consumer Bankers Association, Independent Community Bankers of America, American Bankers Association, and America’s Credit Unions.
Overdraft Rule Background
On November 17, 2024, Chairman Scott sent a letter to the White House calling on the Biden administration’s financial and housing regulators to cease all rulemaking activity. At a December 2024 committee hearing, Chairman Scott called out CFPB Director Rohit Chopra for ignoring his demands to pause rulemaking and pressing forward with an aggressive agenda. On December 12, 2024, after the Consumer Financial Protection Bureau’s (CFPB) finalized the overdraft rule, Chairman Scott released a statement opposing the rule and Director Chopra’s midnight rulemaking.
On December 17, 2024, Chairman Hill sent letters to all agencies under the House Financial Services Committee’s jurisdiction, including the CFPB, warning against finalizing partisan rulemakings prior to President Trump taking office. On December 23, 2024, Chairman Hill released a statement opposing the rule and Director Chopra’s midnight rulemaking.
Chairman Hill was joined on the resolution by Reps. Bill Huizenga, Ann Wagner,, Roger Williams, William Timm, Dan Meuser, Byron Donalds, Andy Ogles, Maria Salazar, Troy Downing, Mike Haridopolos, Tim Moore, and Glenn Grothman. Senators Mike Crapo, Roger Wicker, Jim Risch, Jerry Moran, John Boozman, Thom Tillis, Kevin Cramer, Cynthia Lummis, Bill Hagerty, Katie Boyd Britt, and Pete Ricketts co-sponsored Chairman Scott’s resolution.
“The Biden Administration’s CFPB routinely targeted legitimate payment incentives and practices in pursuit of political headlines over sound policies,” added Chairman Scott. “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.”
Layoffs Blocked at CFPB
In other CFPB news, the Trump administration has agreed to pause layoffs and funding cuts at the Bureau after United States District Judge Amy Berman Jackson said Trump officials had agreed not to terminate workers, or delete CFPB data. The order states that the Trump administration “shall not delete, destroy, remove, or impair any data or other CFPB records,” except as permitted by federal law, and “it is further ordered that defendants shall not terminate any CFPB employee, except for cause.”
A recent Bloomberg report found the Trump administration to be considering the Office of Management and Budget (OMB) or the U.S. Department of the Treasury to oversee daily functions of the CFPB. News of this oversight came as U.S. Sen. Ted Cruz introduced the Defund the CFPB Act, which would zero out transfer payments from the Federal Reserve to the CFPB.
“The CFPB is an unelected, unaccountable bureaucratic agency that has imposed burdensome and harmful regulations on American businesses, banks, and credit unions,” said Sen. Cruz. “It is an unchecked Obama-era executive arm, and the Federal Reserve should not be transferring funds to it. Enacting this legislation would save American taxpayers billions of dollars and I call on the Senate to expeditiously take it up and pass it.”
On Feb. 1, Trump relieved CFPB Director Rohit Chopra of his duties as head of the Bureau, and installed Russell Vought, as Director who shortly ordered the Bureau to halt its work and shut its doors.
