The Senate voted Thursday to strike down a rule capping most financial institution overdraft charges at $5, a measure adopted late final yr by the Shopper Monetary Safety Bureau that had been anticipated to save lots of Individuals billions of {dollars} per yr.
Senator Josh Hawley, Republican of Missouri, was the lone Republican to oppose the decision, which handed on a virtually party-line vote, 52-48. It is going to now transfer to the Home, the place Consultant French Hill, the Arkansas Republican who leads the Monetary Service Committee, launched a parallel decision final month.
The rule would have restricted the charges banks and credit score unions might cost when clients spend greater than they’ve of their accounts, sometimes $35 per overdraft. The bureau estimated it could save American households $5 billion a yr. It was instantly challenged in court docket by banking commerce teams.
The decision was achieved by way of the Congressional Evaluate Act, a 1996 legislation that allows lawmakers to reverse just lately adopted rules with a easy majority vote. It can’t be filibustered. The overdraft rule, which the buyer bureau finalized in December after years of preparatory work, was scheduled to take impact in late 2025.
Democrats are getting ready to struggle the decision within the Home, the place they hope the slim Republican majority will work of their favor.
The American Bankers Affiliation, a plaintiff within the lawsuit, praised the Senate’s motion.
“If carried out, the C.F.P.B.’s Eleventh-hour rule imposing authorities value controls would drive many banks to restrict or remove overdraft safety as we all know it,” mentioned Rob Nichols, the commerce group’s chief govt. “Many Individuals could be pushed to much less regulated and better danger non-bank lenders to cowl surprising or emergency bills.”
Shopper advocates mentioned the rule’s elimination would enable banks and credit score unions to proceed charging charges far increased than their precise prices for the service.
“Repealing the C.F.P.B.’s overdraft price limits will harm working households who’re already fighting excessive costs and inflation,” mentioned Chuck Bell, the advocacy program director at Shopper Experiences.