New York (AP) – The room voted on Wednesday to overthrow a rule that would have Limited banking overdraft costs At $ 5, after the Senate, moving to dismantle the rules that the Biden administration had estimated to save it from billions of dollars to consumers.
The resolution killing the rule, which adopted house 217-211, will now go to the White House for the signing of President Donald Trump. The Republicans argued that the “disastrous” regulations published in the last days of President Joe Biden’s mandate would have forced the banks to stop offering the protection of the overdrafts and made more difficult for the Americans to access the credit.
“Competition and innovation, not the compulsory price ceilings of the government, remain the best way to guarantee that consumers have access to affordable financial products and services,” said the representative of Arkansas French Hill, Chairman of the Chamber’s Financial Services Committee.
Currently, the largest banks in the country acquire around $ 8 billion in charges each year, according to data from the Consumer Financial Protection Bureau and Bank Public Records. Currently, there is no ceiling on overdraft costs that banks can legally invoice.
Banks and banking groups had previously continued on the rulearguing that this would have led consumers relying on worse and less regulated services. The Republicans voted to cancel the regulations under the Congressal Review Act, a 1996 law which allows the Congress to reverse the recently adopted rules.
Democrats firmly opposed the effort and said that the rule would help consumers who could not afford the costs. The representative of California Maxine Waters, the best democrat of the financial services committee, said that the Americans “had enough of these junk food costs” and wanted to master them.
The rule, scheduled to get into force in October, was part of Biden’s efforts to reduce the costs that hit consumers on daily purchases, including banking services. The CFPB estimated that the rule would have allowed consumers to save around $ 5 billion in annual overdraft fees, or $ 225 per household which generally undergo the costs. Biden had called the costs, which can reach $ 35 per transaction, “exploitation” and consumer defenders emphasize that they hit the most short of money from the banks.
The republican effort to cancel the rule is “shamefully vibrating the American people,” said representative Rashida Tlaib, D-Mich.
When a bank temporarily lends money to a consumer after their account has reached a zero balance, the consumer is generally responsible for the reimbursement both the in their uncovered and the additional costs, which may be more than the original amount billed. In an example, a cup of $ 3 coffee can end up costing someone more than $ 30.
Overview fees were born at a time when consumers have written and cashed more frequently – so that checks were not eliminated instead of bouncing, if there was a calendar problem – but banks regularly increased costs in the first two decades of the 2000s. The majority of overdrafts – around 70% – are invoiced to customers with average accounts between $ 237 and $ 439 According to the CFPB.
“The rule of firm overdraft fees (d) an escape from the paper era which allowed large banks to deceive people to pay excessive overdraft costs and make billions of profits from some of their most vulnerable customers,” wrote Chuck Bell, the director of the advocacy program at Consumer Reports, in a letter to the legislation. “The discovery costs are transformed (ED) of occasional courtesy and ad hoc provided to consumers to a sector of activity.”
Below finalized ruleBanks could have chosen from three options: invoice overdrawn costs of $ 5, invoice costs that covered their costs and losses, or invoice costs as long as they disclosed the terms of the overdraft loan as they would for any other loan, generally expressed as an annual percentage rate, or after.
The finalized rule applied to banks and credit cooperatives with more than $ 10 billion in assets, which included the largest banks in the country. The banks had previously continued the CFPB on these rules and ceilings on credit card delay costs.
“Without access to the protection of overdrafts, many Americans would be pushed to less regulated non -banking lenders and at higher risks to cover unexpected or emergency expenses,” said Rob Nichols, President and Chief Executive Officer of American Banking Association. Nichols said the rule could have led banks to “limit or eliminate the protection of overdraft as we know it”.
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