A Senate bill that would rescind a Biden-era Consumer Financial Protection Bureau rule on overdraft protection is headed for a vote in the House of Representatives on Wednesday afternoon.
House Majority Whip Tom Emmer, R-Minn., told The Daily Signal that the regulation issued by the Biden administration would have led to few financial options for Americans.
“The Biden administration’s last-minute [Consumer Financial Protection Bureau] rule on overdraft protection is just one example of its gross regulatory overreach. House Republicans are rightly nullifying the rule, which would have burdened banks and credit unions, led to fewer options for Americans, and taken away critical financial services for millions of Americans across the country,” Emmer said.
The bill is expected to pass the Republican-led lower chamber and has already passed the Senate through a special legislative process under the Congressional Review Act. Because it concerns regulations enacted by government agencies, the bill was able to pass the U.S. Senate without the normally required 60-vote majority needed to overcome a filibuster. If the bill passes the House, then it will proceed to President Donald Trump’s desk where the president is expected to sign it into law.
A Cap on Overdraft Fees, a Regulatory Overreach
The rule issued by the Biden administration capped most overdraft fees, fines imposed by banks to customers that spend more money than they have in their accounts, to $5 or at an amount that should cover their losses and costs. The rule currently applies to the largest U.S. banks, that is, institutions with over $10 billion in assets, or approximately 150 of the country’s more than 8,000 banks.
The Consumer Financial Protection Bureau rule had estimated the rule would potentially save American households as much as $3.5 billion per year but was also heavily criticized by groups representing the U.S.’ financial institutions. The American Bankers Association, America’s Credit Unions, and the Independent Community Bankers of America wrote a letter in 2024 to then-bureau director Rohit Chopra to ask that the agency undertake a Small Business Regulatory Enforcement Fairness Act review of the impact of the new regulation. The letter argued that “Regardless of which banks are directly subject to the Bureau’s rule, all banks would face market pressure to conform their practices to the Bureau’s rule.”
A Brainchild of Elizabeth Warren
Sen. Elizabeth Warren, D-Mass., first proposed the Consumer Financial Protection Bureau in 2007, before she was an elected official. The Dodd-Frank Act created the agency in 2010. Warren was set to lead the bureau until the Obama administration concluded that her candidacy would not weather Republican scrutiny.
The Consumer Financial Protection Bureau is currently the subject of Department of Government Efficiency efforts with acting Director Russell Vought shutting down many of the agency’s activities and putting employees on administrative leave.
