Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

U.S. Senate Democrats press banks to scrap overdraft fees

Published 03/25/2022, 12:15 PM
Updated 03/25/2022, 12:41 PM
© Reuters. FILE PHOTO: Chairman Senator Sherrod Brown (D-OH) speaks during a Senate Banking, Housing and Urban Affairs Committee confirmation hearing on Capitol Hill in Washington, D.C., U.S. February 3, 2022. Bill Clark/Pool via REUTERS

© Reuters. FILE PHOTO: Chairman Senator Sherrod Brown (D-OH) speaks during a Senate Banking, Housing and Urban Affairs Committee confirmation hearing on Capitol Hill in Washington, D.C., U.S. February 3, 2022. Bill Clark/Pool via REUTERS

By Pete Schroeder

WASHINGTON (Reuters) - A group of U.S. Senate Democrats is pressing large U.S. banks to scrap or significantly reduce overdraft and other fees they charge customers with insufficient funds.

In a letter sent to seven large firms Thursday, the group of five lawmakers -- including Senate Banking Chairman Sherrod Brown -- called for a "fairer and more transparent" fee structure.

Democratic lawmakers and regulators are placing heightened scrutiny on bank fees. The group cited recent research from the Consumer Financial Protection Bureau, which found nearly 80% of such fees are charged to only 9% of accounts. The CFPB is currently soliciting public feedback on ways to potentially curtail overdraft and other "junk fees," and a House Financial Services subcommittee will hold a hearing Thursday on the fees.

Under political and regulatory pressure, several large banks, including some that received letters, have taken steps to curtail such fees.

In February, Citigroup (NYSE:C) announced it would eliminate overdraft fees by this summer. JPMorgan Chase (NYSE:JPM), Wells Fargo (NYSE:WFC) & Co and US Bancorp (NYSE:USB) have moved to give customers extra time to bring their account balances above zero. Bank of America (NYSE:BAC) said it would reduce overdraft fees to $10 from $35 beginning in May and eliminate its "nonsufficient fund" fees.

JPMorgan had already taken other steps requested in the letter, such as eliminating nonsufficient fund fees, according to a spokeswoman.

But banking groups are resisting government efforts to eliminate overdraft fees, arguing they serve a useful purpose.

"A majority of consumers who use the product do so knowingly and count on it when unexpected expenses arise. As a result, contrary to what is stated in the letter, the Consumer Bankers Association believes taking action that would dramatically restrict overdraft could force many families out of the well-regulated, well-supervised banking and toward predatory payday lenders," said CBA spokesperson Lauren Bair Bianchi.

© Reuters. FILE PHOTO: Chairman Senator Sherrod Brown (D-OH) speaks during a Senate Banking, Housing and Urban Affairs Committee confirmation hearing on Capitol Hill in Washington, D.C., U.S. February 3, 2022. Bill Clark/Pool via REUTERS

Copies of the letter were sent to chief executives at JPMorgan, Wells Fargo, Truist Financial (NYSE:TFC) Corp, PNC Financial Services Group (NYSE:PNC), US Bancorp and Charles Schwab (NYSE:SCHW) Corp.

Spokespeople for the other banks either declined to comment or did not respond to a request for comment.

Latest comments

Yeah. Dems dont have much of a problem with unchecked (little wordplay here :)) spending. (-$31,000,000,00.....
I agree if these 9% keep getting hit with 80% of the overdraft fees stop charging them just close their accounts and make them use cash. Simple.
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.