Banks Sue To Stop $5 Overdraft Fee Cap

As expected, nan banking manufacture has revenge a suit to extremity a caller regularisation that would headdress astir overdraft fees astatine $5.

The Community Bankers Association waste and acquisition group, together pinch different groups, sued nan Consumer Financial Protection Bureau (CFPB) successful national tribunal successful Mississippi Thursday seeking to overturn a norm nan bureau finalized earlier successful nan day. The rule, group to spell into effect adjacent October, would restrict ample banks from charging fees, often astir $30-$35, to customers erstwhile they retreat much money than is successful their accounts.

The bureau characterizes overdraft charges arsenic "junk fees" that extract money from households surviving connected nan financial edge. It points to investigation that shows astir overdraft fees are charged to a mini percent of slope customers who incur them repeatedly, usually those pinch debased incomes.

The banking manufacture argues that surveys show customers for illustration nan information nett of being capable to return retired much money than is successful their relationship erstwhile different in installments isn't available.

"The CFPB’s norm connected overdraft services harms Americans who request it most—including nan 26 cardinal Americans who don't person entree to in installments and frankincense guidelines to suffer nan astir if overdraft services are restricted," CBA CEO Lindsey Johnson said successful a property release.

In nan lawsuit, nan group accuses nan bureau of overstepping its authority successful creating nan rule. The banking watchdog was established successful nan aftermath of nan Great Financial Crisis.

The suit is nan latest flashpoint successful a conflict betwixt financial services companies and banking regulators complete what nan management of President Joe Biden has termed junk fees. As nan consequence of a erstwhile lawsuit, courts person astatine slightest temporarily blocked a different CFPB norm limiting credit paper precocious fees to $8.

The early of Biden's management to those curtail fees, arsenic good arsenic nan bureau itself, are successful jeopardy, arsenic Republicans, who person agelong been dispute to nan CFPB, return powerfulness successful Washington successful January. Trump advisor and billionaire Elon Musk called to "Delete" nan bureau earlier this year, calling it redundant.