A Deeper Dive into the CFPB’s Proposed Overdraft Rule

Posted by Ryan Fitzgerald on January 17, 2024

The CPFB issued a proposed rule Thursday that would limit fees that federally insured financial institutions over $10 billion could charge for overdraft fees. While the agency maintains the rule would close “an outdated loophole” in the Truth and Lending Act that created an “unacceptable profit center” for FIs, we know that overdraft services can be a crucial financial lifeline for many credit union members. They are tools for managing short-term cash flow challenges and offer a safety net for consumers to avoid more severe financial consequences associated with missed payments.  

Why it Matters and What We’re Doing: 

As we have seen throughout the agency’s history, policies targeting institutions with $10 billion assets and above trickle down to impact financial services providers of all asset sizes. GoWest will vigorously advocate to protect credit unions’ best interests and allow self-determination as they strive to serve their members. We are working on a comprehensive strategy, and we want you to know that it will include input before the CFPB’s April 1, 2024, deadline for comment. We are conducting a thorough analysis of the Bureau’s proposal. Additionally, we will be working with Congress to outline the significant impacts this policy may have on credit unions and your members – their constituents. This will give our elected stakeholders a greater understanding of the member-owned, member-driven cooperative model, and the impact the proposal could have on GoWest credit unions. 

We look forward to gaining your insight during this process.   

Here’s What the Proposed Rule Does: 

• Applies to FI’s with more than $10 Billion in assets, accounting for 175 of the nation’s largest banks and credit unions.  

• Limits large Fis to charging a fee in alignment with their costs, or in accordance with benchmarks ranging from $3 to $14. 

• Allows profitable overdraft loans if terms are disclosed according to existing lending laws that apply to traditional credit cards. 

Strategizing Our Message 

GoWest will ensure our messaging is clear and concise, and ready to deliver to Members of Congress and regulators as we prepare to come together during the National GAC at the beginning of March, while simultaneously preparing our comment letter to the CFPB. 

Posted in Advocacy on the Move, Federal Advocacy, Regulatory Advocacy.