The House voted to cancel a rule finalized under former President Joe Biden that capped overdraft fees at large banks and credit unions, sending it to President Donald Trump for final approval.
The House voted 217-211 on Tuesday to pass the joint resolution, introduced by House Financial Service Committee Chairman French Hill (R-AR), that would rescind the Consumer Financial Protection Bureau rule. The resolution passed through the Congressional Review Act, a unique legislative process to bypass the filibuster and allow a simple majority vote in both chambers to cancel regulations.
The Senate already voted 52-48 to pass the legislation, which means it is now up to Trump whether to approve the measure. Notably, populist Sen. Josh Hawley (R-MO) voted with Democrats to keep the rule in place.
“As I have consistently said, the CFPB needs guardrails on its enforcement and rulemaking powers, and this rule is another clear example of why,” Hill said in a statement. “The CFPB’s actions on overdraft is another form of government price controls that hurt consumers who deserve financial protections and greater choice.”
The White House said in a statement of administration policy that Trump’s advisers will recommend that he signs the resolution.
In the past, Trump has endorsed the populist idea of capping credit card rates, a policy that most Republicans oppose. Hawley, who voted against the CRA, notably introduced legislation alongside Sen. Bernie Sanders (I-VT) this year that would have done just that.
The banking industry strongly opposed the Biden rule, which would cap overdraft fees at just $5 for banks and financial institutions with more than $10 billion in assets unless the institutions opt for a fee that merely covers their own costs or treat the overdraft payment as a loan. The CFPB estimated that the rule would save consumers $5 billion a year.
Republicans have argued that the Biden CFPB targeted legitimate practices by banks. They also criticized the CFPB for announcing the rule in December when Biden was a lame-duck president.
Banking advocates have argued that the rule is an example of government overreach and that it could threaten overdraft services, which the Consumer Bankers Association described as a “valuable financial lifeline.”
The Wall Street Journal’s editorial board also came out in support of the CRA, praising the Senate for passing the resolution.
TAX RECKONING COMING FOR BESIEGED UNIVERSITIES AT HANDS OF GOP
Senate Banking Committee Chairman Tim Scott (R-SC) sponsored the legislation on the Senate side of things. During remarks on the Senate floor, Scott said that the CFPB rule would hurt people living paycheck to paycheck.
“This overdraft conversation is a critically important conversation if you are like me, a guy who grew up in poverty, a single-parent household, who understands the difficulty, the challenge, of single moms making those ends meet,” Scott said on the Senate floor. “I want every single hardworking American to have access to our financial system.”
