After yesterday’s attempt to give all of the federal bank regulators complete veto power over the CFPA, the GOP today offered an amendment that would prevent regulators at the CFPA from imposing restrictions on bank fees or rates.
The justification was that such restrictions amount to “price controls,” which Rep. Jeb Hensarling (R-TX) said would result in rationing and lead to 1970s style gas lines for financial products. Instead, the GOP wants to leave responsibilities for regulating fees with the same banking regulators that didn’t (and still haven’t) reined them in. Watch it:
First, to think that fee restrictions would result in people lining up because they can’t find financial products strikes me as silly, since they’re not something with a finite supply. How would capping overdraft fees cut down on the number of checking accounts that exist, or could potentially exist in the future?
And it’s precisely because banks abuse things like overdraft fees that the CFPA needs to have power to impose and enforce restrictions. Banks are set to make $38.5 billion in overdraft fees this year, and as USA Today pointed out, overdraft fees are fine in theory, but banks have taken them to an extreme:
Bank of America, which announced changes in its program last week, has been charging up to 10 fees of $35 each in a single day. A majority of large banks — 54%, according to a government survey — reserve the right to process large transactions first, which empties accounts faster, squeezing more overdraft fees from customers.
Americans actually spend more on overdraft fees annually than they do on fresh vegetables. But it’s not just overdraft fees that the banks have abused. According to BankRate.com, this year “ATM fees and monthly service charges on interest-bearing checking accounts climbed to new highs, while bounced-check fees hovered near a high after adjusting for inflation.”
Some banks have even decided that they will charge customers fees for paying off their credit card on time or for not using their credit card enough. “You heard that right: You could be spanked for staying out of debt,” wrote Sandra Block. There are innumerable little ways in which the banks can unfairly take advantage of consumers, which makes it imperative that the banks be able to enforce restrictions. The committee will vote on the amendment when markup resumes tomorrow.