By Charlene Crowell
On December 11, an important but under-reported U.S. Senate hearing addressed the nation’s challenging economy.
After calling to order the session entitled, Protecting Workers’ Money and Fighting for the Dignity of Work, long-time Ohio Senator Sherrod Brown, who for a full decade served as either the Banking Committee’s Chair or Ranking Member, spoke to the financial concerns of everyday people just days before his tenure ended.
“Most people don’t have fancy lawyers,” noted Brown. “They don’t have high-priced lobbyists. The Consumer Financial Protection Bureau (CFPB) is their advocate and their voice. … OUR charge, whether in the Senate or out of it, is to look out for workers and put them at the center of everything we do.”
And in both significant and measurable ways, the CFPB has met its mission by returning nearly $21 billion to more than 205 million consumers who were financially abused in a wide range of personal finance issues. For example:
• Detrimental medical debt collection has now been removed from the credit reports of 22.8 million people who previously had at least one such debt;
• CFPB stopped illegal credit repair scams and returned $1.8 billion to 4.3 million consumers harmed by credit repair companies that illegally charged advance fees and used deceptive bait-and-switch advertising tactics; and
• Through 39 public enforcement actions, including six Military Lending Act violations, CFPB returned $363 million to veterans and service members.
Beyond these and other enforcement actions, CFPB has promulgated key rules governing personal financial transaction that together provide clarity and transparency for financial firms and consumers alike.
Unfortunately, and despite notable achievements, the agency remains as contentious a topic today as when it began in 2011. And with a new Congress and President in 2025, consumers and their advocates would be prudent to remain watchful.
In particular, a new rule that brings the potential to save consumers $5 billion each year may be at risk. Previously, overdraft fees ranged as high as $35 per transaction, with affected consumers learning of the charges after receiving their monthly bank statements. Those hardest hit with these predatory fees are consumers whose bank balances provide slim to no financial cushion – the millions who work paycheck to paycheck and may be aptly described as ‘the working poor’.
Finalized in December and scheduled to take effect this October, CFPB’s overdraft fee rule closes a bank overdraft loophole that had been allowing financial institutions to unfairly charge billions in excessive fees. Financial institutions with assets of $10 billion or more will now be required to comply. Those that wish to offer overdraft as a convenient service would be allowed to set their fee at an amount that covers their costs and losses – instead of generating a revenue stream designed to boost profits. Additionally, the rule calls for account-opening disclosures that enable comparison shopping, and give consumers a choice of whether to pay automatically or manually.
Earlier and in multiple, related overdraft enforcement actions, CFPB returned a combined total of $446 million from institutions found to have charged their respective customers with illegal fees: Wells Fargo ($205 million), Regions Bank ($141 million), Navy Federal Credit Union ($95 million), and Atlantic Union ($5 million).
“For far too long, the largest banks have exploited a legal loophole that has drained billions of dollars from Americans’ deposit accounts,” said CFPB Director Rohit Chopra. “The CFPB is cracking down on these excessive junk fees and requiring big banks to come clean about the interest rate they’re charging on overdraft loans.”
In a comment letter that earlier urged enactment of overdraft reform, the Center for Responsible Lending noted this predatory loan’s disproportionate impact on Black and Latino consumers.
“[O]verdraft fees continue to be a major reason why consumers lose bank accounts. Black and Latino consumers are already four to five times more likely to be unbanked than white Americans, wrote CRL. “They are also disproportionately likely to be ejected from the financial mainstream. Ejection from the mainstream financial system can have long lasting and negative systemic effects. The Proposed Rule has the opportunity to save at least $3.5 Billion for the 23 million consumers who pay overdraft fees yearly.”
Perhaps, Senator Brown summarized best the consumer challenge before us.
“As important and effective as Wall Street reform was, it was incomplete. We still have an economy where hard work doesn’t pay off like it should… And over the next four years, the work of the Consumer Financial Protection Bureau will be more crucial than ever. The work continues.”
Charlene Crowell is a senior fellow with the Center for Responsible Lending. She can be reached at Charlene.crowell@responsiblelending.org.
