The Senate has voted to overturn a rule capping bank overdraft fees at $5

Early Thursday morning, the Senate voted to overturn a rule that would have capped most bank overdraft fees at $5 — a regulation projected to save Americans billions of dollars annually.

The vote was narrowly divided along party lines, passing 52 to 48. Missouri Republican Sen. Josh Hawley was the only GOP member to vote against the resolution. The measure now moves to the House, where Arkansas Republican Rep. French Hill introduced a companion resolution in February, according to The New York Times.

The overturned rule, implemented by the Consumer Financial Protection Bureau (CFPB) last year, sought to limit the overdraft fees banks and credit unions could charge when customers overdrew their accounts. Most institutions currently charge around $35 per overdraft. The CFPB estimated the rule would have saved consumers approximately $5 billion annually. Banking industry groups quickly challenged the regulation in court.

Senators used the Congressional Review Act — a 1996 law allowing Congress to reverse recently enacted federal regulations with a simple majority vote — to nullify the rule. The process bypasses the filibuster.

The CFPB’s rule, finalized in December after years of regulatory work, was scheduled to take effect later this year. Now, House Democrats are gearing up for a fight, hoping to leverage the narrow Republican majority to block the resolution in the lower chamber.

Banking industry representatives welcomed the Senate vote. Rob Nichols, CEO of the American Bankers Association — a plaintiff in the legal challenge — said the rule would have amounted to “government price controls.”

“If implemented, the CFPB’s 11th-hour rule... would force many banks to limit or eliminate overdraft protection as we know it,” Nichols told The Times.
“Many Americans would be driven to less regulated and higher-risk non-bank lenders to cover unexpected or emergency expenses,” he added.

Consumer advocates sharply disagreed, arguing that repealing the rule allows banks to continue charging fees far higher than the actual cost of providing overdraft services.

“Repealing the CFPB’s overdraft fee limits will hurt working families who are already struggling with high prices and inflation,” said Chuck Bell, advocacy program director at Consumer Reports.

Ahead of the vote, former Transportation Secretary Pete Buttigieg voiced concern on social media, writing on X (formerly Twitter):

“Not getting much attention, but the Senate GOP is about to start voting — to make sure banks can charge higher overdraft fees. Seriously. Good time to let your Senators know what you think of that.”

On Thursday afternoon, Melanie D’Arrigo, executive director of the Campaign for New York Health, added on X:

“Commercial banks donated $23,992,279 to elect Republicans last year. Today, Republicans voted to end the cap on overdraft fees. This is what corruption looks like.”

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