GOP Members, Credit Union Trade Groups Blast Credit Card Fee Proposal

Credit union groups CUNA and NAFCU were among the financial trades critical of the CFPB's plan to curb credit card late charges. Learn why.

David Baumann


Mar 6



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David Baumann

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CUNA and NAFCU among the financial trades critical of CFPB plan to curb credit card late charges.

House Republicans and financial trade groups, including CUNA and NAFCU, are blasting the CFPB for proposing to limit credit card late fees and for the process used to develop the plan.

In separate letters, the politicians and trade groups argue that before the agency proposed the plan, it should have convened an industry review panel to examine the cost on small businesses.

The criticism comes as House GOP members step up their promised crackdown on an agency they say has consistently exceeded its authority. The House Financial Services Committee’s Financial Institutions and Monetary Policy Subcommittee has scheduled a CFPB hearing for next Thursday.

While witnesses have not been announced, the subcommittee has telegraphed its plans with the hearing’s title: “Consumer Financial Protection Bureau: Ripe for Reform.”

Inside the GOP Letter

In their letter to the agency, the House Republicans—including Financial Services Committee Chairman Rep. Patrick McHenry, R-N.C.—blast the bureau for the credit card late fee proposal, which would cap most late fees at $8.

“We demand that the CFPB abide by the mandate promptly and analyze not just the loss of fee income but, also, the additional burdens of compliance cost, debt collection cost, customer service cost, and operational cost, which are inherently higher for smaller banks and credit unions,” the Republicans wrote.

The letter also contended that, to account for lost income, lenders will be forced to shift their lending portfolios to only highly qualified borrowers who are less likely to pay late and to raise interest rates on all extensions of credit.

Further, the Republicans said, without the incentive to pay on time, it is very likely that timely payment rates will decrease.

They further noted their concern that the CFPB did not “fulfill its statutory obligation” to convene a small business review panel they said is required under the Small Business Regulatory Enforcement Fairness Act.

Additionally, the GOP members expressed their unhappiness that the CFPB “broke with precedent and for the first time failed to address credit card late fees when it issued the annual fee adjustments as required under Regulation Z.”

Typically, those annual adjustments reflect changes in the Consumer Price Index.

Inside the Financial Trades Letter

In their own letter, the financial trade groups request an additional 60 days to comment on the credit card proposal.

“Failure to provide sufficient time for industry to consider the proposed rule’s impact on consumers would result in an incomplete administrative record and arbitrary agency action, and likely would result in unintended consequences, adverse consumer and small business impact, and ultimately create flawed public policy,” they wrote.

The joint letter concludes by stating that, “there simply is no reason to rush a rulemaking that will have a significant impact on the daily financial lives of the consumers the CFPB is charged with protecting.”

Legislation Introduced

And as Republicans prepare for next week’s Financial Services Committee hearing on the CFPB, committee member Alex Mooney, R-W.V., introduced legislation he said would ensure that the agency conduct cost-benefit analysis before issuing rules.

“It is long past time for the Consumer Financial Protection Bureau to adhere to a rigorous and transparent cost-benefit analysis,” Mooney said.

He noted that 18 Republican members of the Financial Services Committee are cosponsoring the bill, H.R. 1313.

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