April 11, 2024

Congressional Resolutions Seek To Overturn CFPB Credit Card Late Fee Rule

Members of the U.S. Senate and U.S. House of Representatives have introduced joint resolutions that would overturn the Consumer Financial Protection Bureau’s rule to lower the safe harbor amount for credit card late fees. Senate Joint Resolution 70 and House Joint Resolution 122 would overturn the rule if passed by both houses of Congress and signed by the president. 

Congressman Blaine Luetkemeyer and Congresswoman Ann Wagner are co-sponsoring the House resolution.

“We thank Congressman Luetkemeyer and Congresswoman Wagner for their leadership to stop the CFPB from implementing this rule that creates long-term harm for individuals that the CFPB means to help,” said MBA President and CEO Jackson Hataway. “The CFPB’s rule is bad for consumers, businesses and banks. It will increase the overall cost of credit for all consumers while driving more providers out of the market. We highly encourage our congressional delegation to support these resolutions.”

As previously shared by MBA, Hataway said it’s quite concerning that this rule will force unbanked and underbanked populations to move closer to predatory entities to serve their credit needs.

“The CFPB’s irresponsible and divisive rhetoric around this issue, as well as all of the areas of banking at which its constant barrage of press releases and guidance documents are aimed, will ultimately do the most harm to the very consumers it was created to protect,” he said.

The American Bankers Association has expressed its support for the two resolutions in letters to Senate and House lawmakers. In early March, ABA joined the U.S. Chamber of Commerce and four business groups in a lawsuit seeking to overturn the rule, arguing the CFPB exceeded its statutory authority and offered deficient analysis and reasoning for the rule to achieve a pre-ordained outcome. Last Friday, the 5th U.S. Circuit Court of Appeals ruled a district court erred when it transferred the lawsuit from Texas to Washington, D.C. In a 2-1 ruling, the appeals court ruled that the Texas district court erred in transferring the case because the 5th Circuit had already granted a temporary stay that paused the transfer order.

Minnesota District Court Grants FDIC Motion In NSF Lawsuit

This week, the U.S. District Court of Minnesota granted a motion from the Federal Deposit Insurance Corporation to dismiss a lawsuit brought by the Minnesota Bankers Association and Lake Central Bank challenging the Unfair or Deceptive Acts or Practices Act position concerning nonsufficient funds fees for represented items.

The lawsuit was in response to updated FDIC supervisory guidance issued June 2023 regarding multiple re-presentment NSF fees as a possible violation of Section 5 of the Fair Trade Commission Act. The practices the FDIC seeks to sanction or prohibit have been accepted banking practices for decades.

The court’s order is subject to appeal and thus may not become final. Although the dismissal is disappointing, MBA General Counsel Keith Thornburg said the order does clarify that the guidance is not a rule.

“Because the court determined the guidance isn’t a rule, there is a legal argument that no actionable violation exists under the FTCA for the FDIC to enforce by order, restitution or penalty,” Thornburg said.

He added that federal enforcement actions for injunctive relief or penalties under the FTCA can be taken for the violation of a cease-and-desist order or a rule that proscribes the conduct to be sanctioned.

“FDIC guidance and examination findings do not constitute a cease-and-desist order or rule. As a result, FDIC recommendations and directives presented in examinations based on the NSF guidance do not provide a basis for the FDIC to enforce a remedy under the FTCA. Any attempt to enforce guidance raises serious constitutional questions of due process,” Thornburg said.

Any bank engaged with the FDIC in a specific matter related to this guidance should seek advice of counsel before responding to any finding or recommendation presented by the FDIC. 

Join NextGen’s Teach Children To Save Challenge!

Throughout April, Missouri bankers are teaching basic savings principles to students in their communities as they celebrate National Financial Literacy Month. MBA-member banks participating in the Teach Children To Save 2024 Challenge sponsored by MBA’s Next Generation in Banking could win $250 for local schools or organizations in their communities.

Bankers who share photos of their presentations on their banks’ Facebook, X, LinkedIn or Instagram accounts and tag MBA (Facebook, X, LinkedIn or Instagram) will automatically be entered into a drawing to win $250 for a school or community youth organization from MBA.

“MBA will award four $250 prizes,” said MBA Vice President Emily Lewis. “We also encourage the winning banks to match this amount, giving a school or organization an opportunity to win as much as $500!” 

The contest ends Tuesday, April 30. Photos must be posted on social media channels and tag MBA by 5 p.m. Wednesday, May 1. Additional details are posted online.