Republicans are moving forward with a resolution to nullify a Biden-era reform that protects against excessive overdraft fees when banking, Rolling Stone reported Tuesday, in what reporter Nikki McCann Ramirez described as a "direct attack on consumers."
The rule in question, passed by the Consumer Financial Protection Bureau and part of a broader war by the Biden administration on so-called "junk fees" meant to surprise consumers, prevents banks from charging more than $5 in penalties if an account holder overdraws from their account. This regulation "gave banks several options to manage overdraft costs without placing an excess burden on consumers" — nevertheless, Republicans have vowed to eliminate this regulation, and the Trump administration is in favor of the effort.
A resolution to abolish the rule was introduced last week by Rep. French Hill (R-AR).
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The resolution takes advantage of a procedure called the Congressional Review Act, whereby both chambers of Congress can "disapprove" by a simple majority of a rule passed by a regulatory agency within a certain time, and if signed by the president, the rule will be permanently proscribed from that agency's powers.
The Trump administration used this procedure extensively during his first term to wipe out many financial and environmental regulations passed in the final year of the Obama administration.
Former President Joe Biden, recognizing this risk in case Donald Trump was re-elected, moved strategically last year to make sure as many of his regulations as possible were finalized outside the time limit when a Republican Congress could review them. This would require Trump to direct the agencies in question to repeal the rule themselves, a process that takes much longer and can be subject to court challenges. However, the overdraft fee rule was enacted inside the time limit that lets Republicans in Congress review and repeal it directly.
The CFPB itself, created after the 2008 financial crisis to give consumers recourse when financial institutions violate their rights, has been a major target for elimination by Republicans for years, and Trump, along with tech billionaire Elon Musk, are trying to summarily dismantle it by fiat, although their actions have been put on hold by a federal judge.
