Today, the U.S. Senate passed a Congressional Review Act (CRA) resolution led by Senator Tim Scott of South Carolina. The resolution seeks to repeal a final rule from the Consumer Financial Protection Bureau (CFPB) under the Biden Administration, which had imposed new price controls on overdraft services offered by banks and credit unions. Critics argued that this rule would diminish access to credit and essential financial services.
Senator Scott presented his views on the Senate floor, articulating the potential adverse effects of the CFPB rule on consumers. He highlighted concerns about increased numbers of unbanked individuals and reduced financial options.
Addressing the Senate, Senator Scott criticized the Biden Administration's focus on "junk fees," describing it as a diversion from the issue of inflation affecting American households. He emphasized the financial hardships faced by many Americans, attributing this to what he termed "Bidenflation," which he claimed decreased the average American's spending power by over a thousand dollars.
Senator Scott explained the function of overdraft fees for those living paycheck to paycheck and how capping these fees could eliminate financial options for those individuals. He underscored the importance of financial inclusion, referencing a study from the Federal Reserve Bank of New York, which indicated that capping overdraft fees could lead to reduced financial inclusion. The study found that overdraft fee caps might drive banks to decrease overdraft coverage and deposit supply, ultimately resulting in more returned checks and diminished account ownership among low-income households.
In his argument for repealing the rule, Senator Scott expressed his desire to allow every hardworking American access to financial systems, including resources like free checking accounts. He argued for providing consumers with all financial options and trusting them to manage their own resources effectively. "To do the right thing for the working class," he stated, "is to give them all the options and let them decide."