Attorney General Mayes, alongside 22 other state attorneys general, has urged Congress to reject a resolution that seeks to overturn a Consumer Financial Protection Bureau (CFPB) rule from 2024. The rule limits overdraft fees that can be charged by major banks, aiming to prevent financial strains on consumers.
“Banks should not be profiting from people's misfortunes,” stated Attorney General Mayes. She emphasized that such fees impact individuals, particularly when they are financially vulnerable. According to her, the CFPB rule is critical for ensuring banks treat customers fairly and prevent exploitation of those living paycheck to paycheck.
House Joint Resolution 59 challenges the CFPB rule, which applies to banks with assets exceeding $10 billion. The rule sets reasonable caps on fees for account overdrafts. The Senate recently passed its version of the resolution against the CFPB's rule with a close vote of 52-48. Republican Senator Josh Hawley joined Democrats in opposition to the resolution.
Typically, the overdraft fee costs approximately $35, often exceeding the overdraft amount itself. These fees contribute significantly to bank revenues, generating about $5.8 billion in 2023 alone.
Attorney General Mayes and her coalition assert that the CFPB rule requires banks to treat overdraft fees as loans if they choose to continue profiting from them. Overdraft fees are usually repaid swiftly, translating a $35 fee on a $26 average overdraft into an annual interest rate equivalent of 16,000 percent.
The letter argues that the CFPB rule is essential for shielding bank customers from excessive fees, which often lead to harmful account closures and credit issues. Many banks, including Citigroup, Capital One, and Ally Bank, have already removed overdraft fees while maintaining overdraft protection benefits for customers.
Joining Attorney General Mayes in this initiative are the attorneys general from California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, New York, North Carolina, Oregon, Rhode Island, Vermont, Washington, Wisconsin, and the District of Columbia.