GOP lawmakers aim to reverse Biden-era $5 overdraft fee cap
Rep. French Hill, who is chairman of the House Financial Service Committee, is looking to overturn a Biden-era rule that capped bank overdraft fees.
LITTLE ROCK, Ark. — Arkansas Congressman French Hill along with Senator Tim Scott of South Carolina are looking to roll back a Biden-era rule that capped bank overdraft fees at $5 and closed an “outdated overdraft loophole.”
Last week, the pair introduced a joint resolution to overturn the Consumer Financial Protection Bureau rule that was implemented in Dec. 2024 in the final days of the Biden administration.
Under President Joe Biden, the CFPB announced that the rule change “took action” to close a loophole they said “exempted overdraft loans from lending laws.”
The rule applies to bank and credit unions with over $10 billion in assets and gave those institutions the ability to either cap overdraft fees at $5, cap the fee to an amount that covers any losses, or disclose the terms of an overdraft loan.
Rohit Chopra, who was the CFPB director under Biden, called the decision a way to crack down on “excessive junk fees” and require “big banks to come clean about the interest rate they’re charging on overdraft loans.”
Rep. Hill, who is the chairman of the House Financial Service Committee, called this rule “another form of government price controls that hurt consumers who deserve financial protections and greater choice.”
“Our [Congressional Review Act resolution] will help overturn this harmful rule and is a next step toward ensuring the CFPB halts all ongoing rules until it answers to Congress, just like any other non-independent federal agency,” Hill said.
Sen. Scott called the rule implementation a way for the Biden administration to make “political headlines” instead of sound policies. “The overdraft rule was yet another example – many consumers rely on overdraft services to make ends meet and limiting this practice will push Americans to riskier financial products.”
The Democratic Party of Arkansas labeled the move by Hill, a former bank executive, of serving “the interests of big banks & financial institutions rather than hard-working Americans.”
Consumers reportedly paid over $5.8 billion in overdraft and NSF fees in 2023, which was down over 50% versus pre-pandemic levels.
In a press release, Hill and Scott said the roll back has the support of “key stakeholders” which included three trade groups that represent banking companies.