New York Attorney General Letitia James, along with 22 other attorneys general, has formally requested that the U.S. House of Representatives vote against a resolution that would overturn the Consumer Financial Protection Bureau’s (CFPB) 2024 rule on overdraft fees. The rule regulates the fees charged by banks holding over $10 billion in assets.
Attorney General James emphasized the need for consumer protection, stating, “Overturning this rule will only do one thing: help big banks profit at your expense.” The CFPB rule was established to limit excessive fees that can affect consumers’ credit and lead to account closures.
House Joint Resolution 59, if passed, would nullify the 2024 rule. The Senate has already narrowly passed its counterpart resolution with a 52-48 vote. The resolution saw opposition from Republican Senator Josh Hawley, who, along with Senate Democrats, voted against it.
Bank overdraft fees typically average $35 and have been a substantial revenue source, generating approximately $5.8 billion in 2023. The CFPB’s rule categorizes these fees as interest on a loan. Given the quick repayment rate, a $35 fee on a $26 overdraft effectively equals an annual interest rate of 16,000 percent.
Attorney General James and her coalition argue that the rule guards consumers against unnecessary charges that can result in involuntary account closures and harm credit scores. Some banks, like Citigroup, Capital One, and Ally Bank, have already removed these fees while maintaining overdraft protection.
Attorneys general from 20 states and the District of Columbia support Attorney General James, as does the Hawaii Office of Consumer Protection. This coalition includes representatives from regions such as California, Illinois, and Massachusetts.
Attorney General James has been involved in several consumer protection efforts, such as obtaining over $1 million from Netspend for illegal fees and securing a $77 million judgment against three merchant cash advance companies. She has also led actions to call for the elimination of overdraft fees from major banks like JPMorgan Chase and Wells Fargo.