Washington, D.C. — Following news that the United States Senate has voted 52-48 to roll back a critical consumer protection from the Consumer Financial Protection Bureau (CFPB) that would cap exploitative overdraft fees—an effort led by Senator Tim Scott (R-SC) and Rep. French Hill (R-AR-02)—the American Economic Liberties Project released the following statement.

“This is a massive and disgraceful giveaway to Wall Street,” said Morgan Harper, Director of Policy and Advocacy at the American Economic Liberties Project. “High overdraft fees are exploitative and wildly unpopular. The CFPB’s rule closed a loophole that banks have used for years to trap consumers in debt. Instead of standing with working Americans, Senate Republicans have chosen to block the rule and protect a financial system that allows banks to punish the most economically vulnerable, as many struggle to keep up with the cost of living. With a vote on the House floor likely coming next week, it remains to be seen if House Republicans also will cave to big banks and raise overdraft fees for millions.”

Senator Josh Hawley (R-MO) was the only Republican Senator to vote against the measure. The Senate’ vote comes at a time when new polling indicates a majority of Americans view financial protections as very important and support these rules being kept in place or expanded. Despite clear public support, the CFPB under the Trump administration has moved aggressively to dismantle its enforcement capabilities, shutting down its Washington headquarters, allowing a backlog of consumer complaints, firing hundreds of employees, and dropping key lawsuits that would have held corporations accountable.

Overdraft practices have also been the source of tens of millions of account closures, which Republicans like Senator Tim Scott claim to be against. The CFPB found that involuntary account closure was “about 2.5 times as likely for consumers who opted-in [to overdraft services] than for consumers who [did] not.” From 2000 to 2005, there were approximately 30 million involuntary bank account closures, and “virtually all of these closures were due to repeated overdraft or non-sufficient funds activity.” Moreover, after an account is closed due to overdraft fees, the individual or organization may be blacklisted by the banking industry and denied a new account when they apply elsewhere.

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