Financial Trades: CFPB Must Conduct Small Business Review Before Issuing Overdraft, NSF Rules

Groups contend that federal law requires the convening of a small business review panel

Financial services trade groups are warning Consumer Financial Protection Bureau Director Rohit Chopra that before the bureau issues its long-awaited proposed rules governing overdrafts and non-sufficient fees, the agency must conduct a detailed analysis of the plan’s impact on small businesses.

That analysis must include the convening of a panel of small financial institutions that would be affected by the rule, the groups wrote in a letter to Chopra on Wednesday. They claim the CFPB cannot issue the proposed rules until the panel issues a report.

The letter was signed by America’s Credit Unions, the new trade group formed when the Credit Union National Association and the National Association of Federally-Insured Credit Unions merged. The letter also was signed by the American Bankers Association and the Independent Community Bankers of America.

The CFPB said in its Fall update to its regulatory agenda that it intends to issue rules governing how overdraft and non-sufficient fee programs operate, in an effort to ensure that financial institutions are not overcharging or deceiving consumers.

The financial groups wrote that “These rulemakings will have a significant economic impact on banks and credit unions with assets of $850 million or less.” They added that if the bureau intends to issue a proposed non-sufficient funds rule using its authority to regulate unfair, deceptive or abusive acts or practices, the rule likely will apply to all financial institutions, including small ones.

“After all, if the Bureau concludes in a rule that certain practices are unfair, deceptive or abusive, that conclusion would apply universally, and the Federal banking agencies must apply it to the banks they supervise,” they wrote. Similarly, any overdraft rule likely would affect all financial institutions, they added.

A progressive government watchdog group immediately attacked the financial services trade groups for their pre-emptive attack.

“Lobbyists for big banks, credit card companies -- and Congressional Republicans in their pocket -- will say or do anything to keep price-gouging everyday Americans with hidden junk fees that serve no purpose other than [padding] profits,” said Liz Zelnick, director of the Economic Security and Corporate Power Program at Accountable.US.