Last week, Senate Banking Committee Chairman Tim Scott and House Financial Services Committee Chairman French Hill introduced Congressional Review Act (CRA) legislation challenging the Consumer Financial Protection Bureau’s (CFPB) overdraft rule. The December 2024 rule required banks with more than $10 billion in assets to:
• Cap overdraft fees at $5;
• Set their overdraft fee to an amount that covers costs and losses; or
• Disclose the terms of the overdraft as a loan.
The CRA allows the legislative branch to overturn the rules issued by a federal agency with a simple majority vote of the House and Senate. The Act requires that Congress act before the end of 60 legislative days in either the House or the Senate.
Since the bureau was under no Congressional mandate to issue a rule on overdraft, Congress’ success would, effectively, end the CFPB’s efforts to upend the product/service.
It’s important to note that many of the Biden-era rules were issued with the CRA’s timelines in mind, ensuring that Congress would not be able to mount a challenge before the 60-legislative-day timeline ran out.
