Senate Dems Accuse Big Banks of Trying to ‘Quash’ CFPB Late Fee Rule
Senate Democrats have accused big banks of trying to ‘quash’ the CFPB's late fee rule in a letter notably not sent to any credit unions. Learn why.
Letter seeking information notably not sent to any credit unions.
Seven Senate Democrats are taking aim at ten of the largest credit card issuers—largely banks—charging that the companies are attempting to “quash” the CFPB’s card late fee rule that the lawmakers said will save consumers billions of dollars.
Notably, despite credit union opposition to the new rule, the senators did not send the letter seeking information about the institutions’ late fees to any credit union.
The CFPB has proposed limiting credit card late fees to $8; comments on the proposal were due this week.
By and large, the financial services industry has opposed the rule, contending that the $8 limit was unfair and would cost them the income needed to handle credit cards.
Support From Democrats
Democrats have supported the rule.
“We write regarding the Consumer Financial Protection Bureau’s (CFPB) proposed rule to limit exorbitant credit card late fees and save American consumers billions of dollars, and to inquire about the role your company is playing in an ongoing effort by the country’s most powerful banks to quash that rule,” the senators, including Banking Chairman Sherrod Brown, D-Ohio, as well as Sens. Elizabeth Warren, D-Mass. and Bernard Sanders, D-Vt., stated.
They added that although Congress has required that late fees be “reasonable and proportional” to the costs incurred by the issuer, banks have “exploited” a loophole that has allowed them to charge fees as much as five times the cost.
“Consumers clearly suffer under excessive late fees. American families have an opportunity to save billions in excessive credit card late fees and will benefit greatly from the CFPB’s efforts to curb these practices,” the senators wrote.
What Else Is in the Letter?
Additionally, they sent the issuers a series of questions they would like them to answer by May 23. Those issues include:
–How much money the issuers collect in late fees and what is the proportion collected from low-income earners.
–The estimated cost of collecting fees.
–Whether the issuers agree with the banking lobby that the rule will hurt those it attempts to help.
–Why many banks have eliminated overdraft fees without raising costs for consumers but have opposed eliminating late fees.
The letters were sent to the CEOs of PNC, JPMorgan Chase, Capital One, Citigroup, Discover, Bank of America, American Express, Wells Fargo, US Bancorp, and USAA.