By Senator Lena C. Taylor
We often hear from politicians, aspiring elected officials, and political pundits about the importance of speaking to the “bread and butter issues” facing Americans. Those issues frequently encompass matters that affect everyday people. Examples include the cost of goods and services, taxes, health care, and roads, to name a few. U.S. President Joe Biden has made real progress in providing real solutions to problems like student loan debt, high unemployment, prescription drug costs. Now, his administration is taking on another obstacle for struggling individuals and families: outrageous bank overdraft fees.
Biden has announced a proposal to significantly reduce the cost of overdrawing a bank account. In a recent statement he said “When companies sneak hidden junk fees into families’ bills, it can take hundreds of dollars a month out of their pockets and make it harder to make ends meet. That might not matter to the wealthy, but it’s real money to hardworking families—and it’s just plain wrong. This is about the companies that rip off hardworking Americans simply because they can.
That’s why today, my Administration took new actions to tackle these hidden fees by proposing a rule that would end excessive overdraft fees. For too long, some banks have charged exorbitant overdraft fees—sometimes $30 or more—that often hit the most vulnerable Americans the hardest, all while banks pad their bottom lines. Banks call it a service—I call it exploitation. Today’s proposal would cut the average overdraft fee by more than half, saving the typical American family that pays these fees $150 a year. That would add up to saving families $3.5 billion every year”.
The proposed regulation could limit the overdrawn account fee to as little as $3, compared to current overdraft charges that can exceed $35 per transaction. The Consumer Financial Protection Bureau (CFPB) and other records indicate that the major banks see an additional $8 billion in annual overdraft fees. Major banks are those with assets exceeding $10 billion in assets and would impact roughly 175 banks.
For those living paycheck to paycheck, watching every penny and far too often “robbing Peter to pay Paul,” Biden’s plan is just the solution that many would benefit from. Republicans have thrown up a number of roadblocks to stop real help from reaching working class families. And I concede that there may be a disagreement about what “help” looks like. So I’ll keep it simple: many congressional republicans are against the proposal, with some claiming the new proposal would harm consumers in the long run. You can’t make this stuff up! However, if Biden is successful, one more real form of help could arrive by 2025.