Following Senator Reverend Warnock’s Urging, CFPB Announces Termination of Overdraft Loophole, Potentially Saving American Families Billions

The Consumer Financial Protection Bureau's (CFPB) finalization of the rule is estimated to save Georgians and Americans up to $5 billion each year, or roughly $225 per household

The loophole exempted overdraft loans from lending laws

At a recent Senate Banking committee hearing, Senator Reverend Warnock urged CFPB to close this loophole

Senator Reverend Warnock has focused on addressing junk fees and chaired a hearing examining how overdraft fees, a type of junk fee, negatively impact hardworking Americans

Senator Reverend Warnock: "I've been fighting a long time for our federal financial regulators to finally crack down on onerous junk fees because they take money out of hardworking American's pockets for no good reason…this is the kind of good we can do when we center the people in our public policy"

Washington, D.C. - Today, U.S. Senator Reverend Raphael Warnock (D-GA), chair of the Senate Banking Subcommittee on Financial Institutions and Consumer Protection which has jurisdiction over the Consumer Financial Protection Bureau (CFPB), applauded CFPB's announcement of a final rule ending an overdraft loophole. Following the Senator's longtime advocacy to address burdensome overdraft fees, the agency's new final rule closes the overdraft loophole that exempted overdraft loans from lending laws and applies to banks and credit unions with more than $10 billion in assets.

"I've been fighting a long time for our federal financial regulators to finally crack down on onerous junk fees because they take money out of hardworking American's pockets for no good reason," said Senator Reverend Warnock. "I'm glad this new rule will give ordinary people some breathing room by saving them some $5 billion a year in overdraft fees. I commend CFPB, because this is the kind of good we can do when we center the people in our public policy."

Senator Warnock has long been outspoken on the importance of addressing junk fees like overdraft fees, as they have a harsh and pointless financial impact on hardworking Americans. The rule is set to save Americans up to $5 billion per year or roughly $225 per household.

"For far too long, the largest banks have exploited a legal loophole that has drained billions of dollars from Americans' deposit accounts," said CFPB Director Rohit Chopra in a press release. "The CFPB is cracking down on these excessive junk fees and requiring big banks to come clean about the interest rate they're charging on overdraft loans."

Senator Warnock has long worked to address the problem junk fees present to hardworking Americans. Earlier this year, Senator Warnock led an effort to address exorbitant school lunch fees charged by payment processors. In late July 2023, as the chair of the Financial Institutions and Consumer Protection subcommittee for the Banking and Housing Committee in the United States Senate, Senator Warnock held a hearing examining how junk fees and predatory practices hurt the wallets of everyday Americans.

Watch the Senator's question on junk fees HERE.

###

Title and affiliation are provided for identification purposes only. A pastor and social justice advocate, Senator Reverend Raphael Warnock was elected to the United States Senate in 2021 and reelected for a full term in 2022. The Senator serves on the Senate Agriculture, Banking, and Commerce committees, as well as the Senate Aging Committee.