Schumer: Quiet Plan To Side With Big Banks Over Families Could Mean A Waterfall Of Fees That Would Drown New Yorkers With More Costs

Amidst the anti-consumer, pro-big bank effort to dismantle the Consumer Financial Protection Bureau (CFPB), U.S. Senator Chuck Schumer revealed and exposed the FINAL leg of Congressional Republicans’ quiet plan to raise Americans’ bank fees, that will drive up unwanted fees for millions of Upstate New Yorkers. Schumer explained that Congressional Republicans will try to seal the deal to protect financial special interests with a vote on Tuesday when the House will vote to overturn the Consumer Financial Protection Bureau’s (CFPB) overdraft fee rule that caps most big bank overdraft fees at just $5.

“Republicans’ quiet plan to side with big banks against the little guy and working families could mean a waterfall of fees for Upstate New Yorkers already struggling to make ends meet,” said Senator Schumer. “Working families have been ripped off by abusive bank fees and practices in the past, and the CFPB’s rule is about protecting hard-working families, not charging them more. So I urge my GOP colleagues to reverse course here and reject overturning this overdraft rule to put money back in people’s pockets and out of the hands of big predatory banks. If the Republicans let this one fee fly, a waterfall of fees will follow, and it is New Yorkers that will feel the brunt.”

Schumer railed against this effort because it could hurt middle-class New Yorkers the hardest, given the number of consumer bank accounts in New York, which is higher than the national average. The rule would save upwards of $5 billion in excessive overdraft fees that millions of households pay. Overturning the rule, as proposed by the Republicans, would cost households an average of at least $225 each year, but MUCH more in New York, Schumer emphasized. Schumer said that some banks take billions of dollars a year from families and seniors that can least afford it. He said the banks don’t need to charge fees like this and that this effort to let fees run wild will open the door to even more excessive bank fees across Upstate New York.

Schumer announced his opposition and is sounding the alarm on the clandestine pro-big bank GOP plan. Schumer said that the CFPB’s overdraft fee rule is designed to protect regular people from being ripped off by predatory bank fees. He urged the House Republicans to reject overturning the CFPB’s overdraft rule and to protect hard-working families instead of taking their hard-earned money to benefit big banks quietly and behind their backs.

Last month, House Financial Service Committee Chairman French Hill (R-AR) and Senate Banking Committee Chairman Tim Scott (R-SC) introduced Congressional Review Act (CRA) resolutions to overturn the Consumer Financial Protection Bureau’s (CFPB) rule capping overdraft fees, and the Senate GOP green-lit it last week. 

The rule caps most bank overdraft fees at just $5, down from the typical $35 charge per transaction, according to National Consumer Law Center (NCLC). With these fees, banks take billions of dollars a year from families that can least afford it, and the Republican chairmen are moving to give big banks this ability, Schumer explained. Banks, which are already profitable, don’t need to charge these fees and some banks, including Capitol One and Citibank, have completely eliminated overdraft fees and they continue to cover overdrafts. However, other banks take about $1 billion a year in overdraft and nonsufficient funds (NSF) fees, and Wells Fargo is one of the biggest offenders.

The CFPB’s overdraft fee rule stops predatory practices that allow the biggest banks to earn billions in profits from the most vulnerable families and seniors. The rule doesn’t stop big banks from covering overdrafts—it caps fees for “overdraft coverage” at $5 or the bank’s costs. Banks can still offer overdraft lines of credit without any price cap, though they are required to provide the same annual percentage rate (APR) pricing disclosure that credit cards provide and to give people adequate time to repay, NCLC explained. 

Schumer explained how the rule helps everyone—especially New York families as New York is more ‘banked’ compared to other states. Schumer explained that by lowering most big bank overdraft fees from $35 to $5, consumers save $5 billion per year, reducing manipulative practices, and increasing transparency and fair competition, according to economists.

“Now that the word is out on Tuesday’s vote, you’ll see the banks, lobbyists, and the people that want to protect the banks’ ability to charge excessive fees start to scramble, and devise a plan to defend it. But it’s indefensible. Who is for excessive bank fees?” Schumer said. “Show me a politician that wants to run an ad on increasing all your bank fees. I am blowing the lid on this disastrous plan and so what happens next? Watch them try to run away from this issue, while siding with big banks over working families and the middle class.”

Schumer warned that other fee increases and gaps in consumer protection could soon follow with:

• ATM fees 
• Minimum balance fees for checking and savings accounts
• Outlandish cashier’s check fees
• Notary fees 
• Account “inactivity” fees
• The removal of $8 cap on credit card late fees
• No more Fair Credit Reporting (excluding medical bills from consumers credit score)
• Selling consumer data without consent
• No regulator for consumers to report predatory products

The New York Federal Reserve Bank’s Credit Insecurity Index may shed light on the number of people with access to mainstream financial services, such as a bank account, who will possibly be exposed to higher fees if Congressional Republicans wipe away this protection. An Upstate New York county-by-county breakdown of percentage of New Yorkers with credit and Credit Insecurity Index Scores for 2023 can be found below: