The Senate on March 27 adopted a resolution that would nullify the CFPB’s overdraft rule.
The Senate adopted S. J. Res. 18 by a vote of 52-48, with Sen. John Hawley, R-Mo., the only Republican voting against repeal.
The House Financial Services Committee already has adopted a companion resolution; it now goes to the House floor. If adopted by the House it then would go to President Trump for his signature.
The resolutions seek to nullify the overdraft rule using the Congressional Review Act, which allows the resolutions to be adopted by a simple majority in each House, without the threat of a Senate filibuster.
If allowed to go into effect on Oct 1, as issued, the CFPB rule would limit overdraft fees to $5 at financial institutions with more than $10 billion in assets, unless they set a cap that covers their actual costs or they treat the payment of an overdraft as a loan and give appropriate disclosures under the Truth in Lending Act and Regulation Z.
In floor debate on the resolution, Sen. Chris Van Hollen, D-Md., said some banks have built an entire system to try to maximize the amount they get from consumers’ overdraft fees. “If you look collectively at the banking system, this is a $5 billion-a-year rip-off,” he said.
However, Senate Banking Committee Chairman Tim Scott, R-S.C., said the overdraft rule would result in financial institutions eliminating overdraft programs, adding that the programs are essential for some consumers, “You start eliminating the possibility of people working paycheck to paycheck to make the decision to continue to use their resources in the most effective way,” he said.