House votes to overturn CFPB overdraft, payments oversight rules

The House of Representatives on April 9 voted to overturn the Consumer Financial Protection Bureau’s proposal to limit the overdraft fees banks with more than $10 billion in assets can charge and the bureau’s oversight of the largest payment firms. 

The House of Representatives on April 9 voted to overturn the Consumer Financial Protection Bureau’s proposal to limit the overdraft fees banks with more than $10 billion in assets can charge and the bureau’s oversight of the largest payment firms. 

Overturning the overdraft rule passed on a 217-211 vote, and came less than two weeks after the Senate passed its related bill. Released in December, the rule would give banks three overdraft options: Charging $5, the estimated amount the bureau at the time said banks need to cover overdraft costs; issue a fee that covers no more than losses or costs; or disclose applicable interest rates. 

House Financial Services Committee Chair French Hill (R-Ark.) supports overturning the overdraft rule. “This government price control on overdraft fees would have limited consumer choice and been detrimental to the families who need the certainty that their purchases will not be denied at the cash register,” he said. 

Democratic National Committee Rapid Response Director Alex Floyd called the overdraft vote an example of Republicans opting “to let big banks go back to scamming consumers out of their hard-earned dollars.”

Issued in November, CFPB supervision covers companies handling more than 5 million transactions per year, including payment processors such as Amazon, Meta, Google, Square and PayPal. 

The CFPB, then under the leadership of Rohit Chopra, alleged that nonbank payment processors are not subjected to the same regulatory scrutiny and oversight as banks. Though the CFPB had enforcement authority over fintech payment processors, agency examiners had allegedly not been closely scrutinizing their activities. 

The top Democrat on the House Financial Services Committee, Maxine Waters, criticized overturning CFPB oversight, arguing it would protect Elon Musk, a Trump advisor and leader of the Department of Government Efficiency. Musk owns X app, which is seeking to soon enter the payments space. 

Waters accused the largest payment apps of playing a major role in payments fraud reaching a record high. “While the same consumer protection laws that apply to banks do not apply to these Big Tech firms, it is critical that the CFPB examine them to ensure they are following the law,” she said. 

House Cosponsor Mike Flood (R-Neb.) criticized the original overdraft rule, saying it would hurt small businesses that rely on instant payments. He deemed it a case of regulatory overreach from the bureau. “Over the last four years, progressive activists sought to dramatically expand the regulatory authority of the CFPB,” he said. “One of the tools they used to achieve their goal was the Larger Participants Rule, which has attempted to leverage the agency’s examination authority to regulate nonbank consumer payments firms. Rolling back this regulation is critical to ensuring that the CFPB doesn’t become a barrier to innovation for job creators.” 

President Donald Trump is expected to sign both bills into law in the coming days. 

Fredrikson & Byron Law