CBA: CFPB’s Agenda Driven by Polling Data, Not Economic or Accurate Market Data

In Letter for the Record to the Senate Banking Committee, CBA Outlines Concerns with Biden Administration’s “Junk Fees” Campaign

WASHINGTON, D.C. – The Consumer Bankers Association (CBA) today submitted a letter for the record to the U.S. Senate Banking, Housing, and Urban Affairs Committee ahead of its hearing tomorrow entitled “Consumer Protection: Examining Fees in Financial Services and Rental Housing.”

As CBA’s comment letter explains, the Consumer Financial Protection Bureau’s (CFPB) recent rulemakings – namely on credit card late fees and overdraft fees – raise questions about whether the CFPB has prioritized supporting the Administration’s re-election campaign over the CFPB’s legal obligation to consider stakeholder input and even consumers’ welfare. Excerpts from the letter are below and the full letter can be found HERE.

On the Biden Administration’s “Junk Fees” Campaign

CBA highlights recent media reports in which a Biden Administration official admits to pushing “junk fees” messaging because it polls well heading into an election:

“Unfortunately, the CFPB’s agenda appears to be driven more by polling data, not economic or accurate market data. This troubling trend was confirmed by the former Deputy Director of the White House National Economic Council, who recently left the White House, and commented two weeks ago that ‘Junk fees, out of 180 things they polled, was in the top three most popular actions. And that one sentence we wanted in the State of the Union ended up being four paragraphs.”

On Credit Card Late Fees

CBA conveys the purpose of credit card late fees – to incentivize consumers to pay on time – and the consumer harm that will come by normalizing frequent late payments:

"While it may seem that late-paying customers could experience some short-term relief from this rule, it will likely result in far more long-term financial harm. The CFPB’s rule will make it easier for consumers to miss their credit card payments. As more consumers pay late, there is a higher chance they will become delinquent. Ultimately, consumers experiencing delinquency will lead to higher credit card balances carried month-to-month and lower credit scores. This can result in far worse consumer outcomes such as difficulty obtaining credit, or higher financing costs for housing, cars, and other necessary purchases. While the consumer may save $22 in the short term, these long-term costs will be so much greater. The CFPB does not even attempt to consider these long-term consumer harms in its proposed or final rule.”

On Overdraft Fees

Before finalizing an overdraft proposal that fails to take into account the decade of bank-led innovations that have led to billions in consumer savings, CBA urges the CFPB consider the consumers that will be harmed by the proposal:

“Before the CFPB takes further action, we urge the Bureau to collect the relevant data to assess consumer impact and conduct a comprehensive study of consumers’ preferences regarding overdraft services. In particular, CBA recommends that the CFPB collect, analyze, and update data on the use of overdraft services, with particular attention paid to frequent users of overdraft services and those who struggle to access other alternative forms of credit such as credit cards.”

CBA Advocacy

• To read CBA’s most recent blog post that highlights the robust competitiveness and unparalleled consumer choice in the credit card marketplace, click HERE.
• To read CBA’s comment letter on the CFPB’s overdraft proposal that would hinder competition and stifle consumer choice, click HERE.
• To view a recent national empirical survey CBA commissioned that highlights the consumer value and need for highly-tailored bank overdraft products, click HERE.
• To read CBA’s statement on joining litigation to halt the CFPB’s credit card late fee rule from taking effect, click HERE.
• To read CBA President and CEO’s opening statement before the U.S. House Financial Services Committee at a hearing on the politicization of financial regulatory policy, click HERE.
• To read CBA’s “Facts Matter” blog post series that corrects misinformation from the CFPB about credit cards and other bank products, click HERE.