Junk Fee Credit
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also bank late fee charge 5x actual cost b/c of automation
SEE CFPB
SEE BIDEN ADMIN
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AN 2 25
OMG
While President Donald Trump and Tesla and SpaceX CEO Elon Musk are making significant changes to federal agencies, Republicans in both the House and Senate are aiming to let banks ramp up overdraft fees.
That's according to a Tuesday article in Rolling Stone, which reported that Rep. French Hill (R-Ark.) and Sen. Tim Scott (R-S.C.) — who chair the House and Senate Banking Committees, respectively — are introducing a bill to repeal a rule capping overdraft fees implemented by former President Joe Biden's administration. That rule capped overdraft fees at $5, whereas they were previously as high as $35. It also allowed for banks to find ways to control overdrafts without needling customers with excessive daily fees. The legislation Hill and Scott rolled out would deem the rule to "have no force or effect" if passed and signed into law.
Acting Consumer Financial Protection Bureau (CFPB) director Russell Vought (also the director of Trump's Office of Management and Budget) said he was "grateful" to Hill and Scott for introducing the bill. He added: "Passing this important legislation will immediately further President Trump’s deregulatory agenda."
According to the Associated Press, overdraft fees are a significant source of revenue for banks, allowing them to bring in roughly $8 billion annually. CFPB data shows that roughly 70% of overdraft fees were charged to accounts that had between $237 and $439, meaning that those fees disproportionately impact the poorest Americans.
The rule — which Trump and the GOP majorities in the House and Senate are likely to undo — is slated to go into effect in October of this year, and is projected to save bank customers about $5 billion per year, or $225 per household. Sen. Elizabeth Warren (D-Mass.) told Rolling Stone that Trump would be breaking his key campaign promise of lowering costs for working-class Americans if he allowed the rule to be eliminated.
“He is now sidelining the agency that over the last dozen years, has returned $21 billion directly to people who got cheated by giant financial institutions," Warren said. "In other words, his plan is to do nothing on reducing costs, but sure enough, put in place a plan to raise costs for people who are working hardest in our economy.”
Campaign finance data from OpenSecrets shows that both Hill and Scott are favorites of donors in the banking industry. The top two industry contributors to Hill's campaign are securities & investment and commercial banks, respectively. The securities and investment sector is also the #2 industry for Scott's donors.
READ MORE:**Bank overdraft charges may be capped at $3 as new Biden rule ends 'junk fee harvesting'**
Click here to read Rolling Stone's report in its entirety (subscription required).
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direct action ? 4 24
public citizen
Do you believe corporations should disclose all their lobbying activity, all around the country?
If so, we need your help to bring Wells Fargo’s secretive lobbying to light. Here’s what you need to know:
- Wells Fargo spent more than $45 million lobbying in Washington, DC over the past decade
- Wells Fargo was fined by the federal government for illegally charging surprise overdraft fees, and we know it lobbied against the Biden Administration’s crackdown on junk fees — so it doesn’t have a strong track record when it comes to protecting consumers
- And while the company publicly supports addressing climate change, it’s a member of third-party groups that lobby against climate action
- *But there’s still so much we *don’t* know, like how much the company spent on anti-consumer lobbying at the state level or how much Wells Fargo pays trade associations and other third-party groups to lobby on its behalf.
- Shareholders and the public deserve to know if Wells Fargo is participating in lobbying that doesn’t align with its publicly stated values or shareholders’ financial interests!
Wells Fargo isn’t going to disclose all of its lobbying activities willingly, so it’s time for the company’s shareholders to take action.
The Wells Fargo annual shareholder meeting is on April 30. Shareholders will be voting on a proposal to expose *all* of the company’s lobbying, beyond what we know about at the federal level.
*We need your help to show these shareholders that there’s broad public support for making Wells Fargo be transparent about all of its lobbying activities....
alternet-no lnx
'Nickel and diming Americans': GOP slammed for helping banks 'squeeze customers' with 'junk fees'
Sen. Tim Scott of South Carolina in Las Vegas in October 2023 (Gage Skidmore)
Alex HendersonApril 19, 2024
The Consumer Financial Protection Bureau (CFPB) — a federal government agency created in 2011 during former President Barack Obama's first term — recently created a cap on credit card late fees.
But on Wednesday, April 17, the Republican-controlled House Financial Services Committee voted to advance a bill that, if passed, would keep those fees much higher than the CFPB would like.
Rolling Stone's Nikki McCann Ramirez reports that the House bill "drastically reduces the caps on credit card late fees — from $30-$41 to $8."
READ MORE:Bank overdraft charges may be capped at $3 as new Biden rule ends 'junk fee harvesting'
Ramirez reports, "The legislation would also repeal the CFPB's ban on automatic adjustment of late fees due to inflation. In the Democratic-controlled Senate, where the bill is expected to fail, a similar repeal measure was introduced by Banking, Housing, and Urban Affairs Committee ranking member Tim Scott (R-SC) — who has recently devoted most of his energy to fawning over Donald Trump — and co-sponsored by 12 other Republicans."
Liz Zelnick, director of the Economic Security & Corporate Power Program at the watchdog group Accountable.US, slammed MAGA Republicans as hostile to consumer protections.
In an official statement, Zelnick complained, "The Committee should put consumers poised to save billions before their industry megadonors. Big bank CEOs that boast of billion-dollar profits after nickel and diming Americans with junk fees don't need more special treatment from the MAGA Congress."
Ramirez notes that in October 2023, the Biden White House "announced a push to eliminate junk fees and increase rate transparency for consumers across various industries" — a push that, according to Ramirez, has been met with resistance from Republicans who are "hellbent on denying" President Joe Biden "any victory in an election year."
READ MORE: 'Doomed': Republicans 'smoking themselves out' in upcoming vote to raise credit card fees
"For all the time Republicans spend complaining about the economic struggles faced by everyday Americans," Ramirez writes, "they remain steadfast in their commitment to ensuring major corporations can continue squeezing their customers."
READ MORE: New rule under Biden would save Americans $10 billion a year in credit card fees
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- ...t he Biden administration is cracking down on “unfair and illegal” price gouging by major corporations
- On March 5, President Biden launched a “Strike Force on Unfair and Illegal Pricing” co-chaired by the Federal Trade Commission and the Department of Justice. Biden launched an interagency strike force to tackle “unfair and illegal” price increases by large corporations, which according to CNBC “Biden sees as a major reason why consumers are not yet feeling the impact of cooling inflation rates and a strong economy.” FTC Chair Lina Khan announced to reporters that the strike force “builds on the FTC’s far-reaching work to promote competition and tackle unlawful business practices that are inflating costs for Americans.” The White House, [3/5/24; CNBC, 3/5/24]
- The strike force's launch coincides with a new CFPB restriction that caps credit card late fees at $8. Citing CFPB data, the New York Times reported that such late fees “have become a major profit source for credit card issuers, generating more than $14 billion in 2022.” According to the Times, the bureau also indicated that credit card issuers have been exploiting a loophole in a 2010 Federal Reserve rule that allowed credit card issuers to adjust late fees based on inflation and raised “their fees far beyond the actual costs they incur when payments arrive late." NPR noted that “by law, the fees are supposed to be tied to a credit card issuer's own costs associated with the late payment,” but the bureau “found that even as banks have adopted cheaper processes for dealing with late payments, the fees have continued to climb.” The New York Times, [3/5/24; NPR, 3/5/24]
- CFPB: An estimated 45 million Americans who incur late fees will save an average of $220 each year — a total savings of $10 billion annually — by capping credit card late fees. “For over a decade, credit card giants have been exploiting a loophole to harvest billions of dollars in junk fees from American consumers,” CFPB Director Rohit Chopra said of the bureau’s move to cap late fees. “Today's rule ends the era of big credit card companies hiding behind the excuse of inflation when they hike fees on borrowers and boost their own bottom lines.” The bureau's press release stated that the rule applies “to the largest credit card issuers, those with more than 1 million open accounts," which “account for more than 95% of total outstanding credit card balances.” Consumer Financial Protection Bureau, [3/5/24]
- A February 2023 poll found “overwhelming bipartisan support” for capping credit card late fees to $8. According to the poll conducted by progressive research group Navigator, 79% of registered voters supported the Biden administration “lowering the limit credit card companies can charge per late fee from $41 to $8.” Those numbers included 74% of independents and 68% of Republicans. Navigator, [3/2/23]
- Potential Trump VP pick Sen. Tim Scott (R-SC) is trying to block the rule capping credit card late fees. Bloomberg reported that “Senator Tim Scott, a potential Trump vice presidential pick and the top Republican on the Banking Committee, said Tuesday he would push the Senate to take action to block the new regulation” through a Senate vote via the Congressional Review Act. “It will decrease the availability of credit card products for those who need it most, raise rates for many borrowers who carry a balance but pay on time, and increase the likelihood of late payments across the board,” Scott argued in a public statement. Bloomberg, [3/5/24]
- ## Conservative media responded to Biden's efforts to save Americans money by attacking him and the new CFPB rule
- Fox Business anchor Maria Bartiromo repeatedly accused Biden of prioritizing reducing credit card late fees over other issues. On March 5, Bartiromo criticized Biden for “what the president is spending his time doing.” Bartiromo said, “This morning he's [President Biden] talking about late fees, and he's talking about corporate America, and it's companies' fault that people are facing inflation.” The next day, Bartiromo continued this line of attack: “We have so many serious priorities,” she said. “I mean a woman is dead because she was murdered by an illegal migrant in Georgia and now we're talking about late fees.” Fox Business, *Mornings with Maria Bartiromo*, [3/5/24, 3/6/24]
- On Newsmax, conservative economist Peter Morici accused Biden of initiating the cap on late fees as a scheme to buy votes. At first, Morici downplayed the number of Americans the new rule would help, before adding: “Think about who's always paying late fees. They're probably the kind of folks that would vote for Democrats. This is a way of motivating them to go out and vote,” he said. “This administration is now getting desperate looking at the polls, and they're looking at every conceivable way to buy a vote.” Morici later compared the rule to Soviet-era price fixing. “If you want the government setting prices, then let’s resurrect the old Soviet Union," he said. Newsmax, *The National Report*, [3/5/24]
- Outkick host Tomi Lahren: “We have an invasion at our southern border that is costing our country billions, and your sleepy President is going after junk fees. Unbelievable.” Twitter/X, [3/5/24]
- WSJ editorial: “The Biden ‘Strike Force’ Is Coming for You.” Instead of blaming credit card companies for charging consumers exorbitant fees, The Wall Street Journal's editorial board characterized the CFPB rule as a “burdensome government regulation,” adding that “such fees have proliferated under Mr. Biden because business costs have increased.” Even though the new rule is expected to save consumers billions, the editorial board concluded that “The Biden Presidency is becoming more expensive for Americans by the day.” The Wall Street Journal, [3/5/24]
- Fox's The Five mockingly described the new initiative as Biden’s “shrinkflation” strike force. After The Five co-host Jeanine Pirro opened a segment by criticizing Biden for the new strike force, co-host Dana Perino piled on, saying, “This is a brainless decision.” She added: “The market is the strike force. But if Biden is interested in doing this, you could look at all of the issues that we're talking about in terms of where he is polling badly. Why is there no strike force to go after the border? How about, could we have a strike force to bring home hostages who are being held in Gaza? What about a strike force on fixing COVID learning loss? I mean we could go on and on.” Fox News, *The Five*, [3/5/24]
- Fox's The Story portrayed the Biden administration’s attempt to rein in illegal and unfair price increases as an attempt to “squash capitalism.” “I was reading a piece this morning about how capitalism is the defining characteristic that sets this country apart from all of our enemies,” Fox host Martha MacCallum said. “So if you squash capitalism, you're going to put that into remission.” Fox Business host Brian Brenberg added, “This is the anti-rich, anti-wealth crusade that they're [Democrats are] on.” Fox News, *The Story*, [3/5/24]
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