The following content is sponsored by Pinpoint Policy Institute.
There are only a few weeks left for Congress to overturn President Joe Biden’s overdraft fee cap rule, which would debank low-income Americans.
One of Biden’s parting gifts was to pull a rug out from under low-income bank customers’ feet. By finalizing a rule that effectively ends the use of overdraft, Americans lose a banking service without receiving any perceptible benefit.
Out of all of Biden’s egregious ideas, one of the most deleterious is the Consumer Financial Protection Bureau’s (CFPB) rule to cap overdraft fees—effectively killing the service altogether. The CFPB’s arbitrary overdraft rule allows the CFPB to dictate overdraft fees by capping them at $5.00. This is a government-mandated price control that removes any incentive for banks to offer the service to customers—effectively eliminating a banking service for Americans. Congress acknowledges that price controls are regressive and create shortages. In this case the shortage is the availability to overdraw a bank account when an emergency arises.
Low-income Americans aim to lose the most if the overdraft rule is finalized. Imposing a government-mandated price control will prevent American families from being able to maintain a bank account. A study from the Federal Reserve Bank of New York concludes that an overdraft fee cap results in a loss of overdraft coverage “and a decline in account ownership among low-income households.” Biden’s overdraft rule harms the most vulnerable Americans.
Former CFPB director Rohit Chopra, a protégé of radical liberal Sen. Elizabeth Warren (D-MA), finalized the overdraft rule just a few weeks before President Donald Trump was sworn into office. Chopra clearly frontloaded the rule before Trump took office—an eleventh-hour shenanigan aimed at undermining Trump’s pro-growth agenda.
Fortunately, Senate Banking Committee Chairman Sen. Tim Scott (R-SC) and House Financial Services Committee Chairman Rep. French Hill (R-AR) are leading the charge to repeal the overdraft rule under the Congressional Review Act (CRA). If Congress passes the joint resolution of disapproval, and President Trump signs it, lower income families throughout the country will continue to have options when it comes to banking, and the administrative state will not be able to produce substantially similar rules in the future.
The overdraft rule is a symptom of a larger issue, the existence of the CFPB itself. Time and again the CFPB has attempted to expand its own power without Congress’s approval. Left-wing unelected bureaucrats have run the CFPB since its inception and have issued rule-makings that would ruin America’s economic growth. Examples of this include rules that prohibit consideration of medical debt in credit reports, rules to control data brokers, and rules that would allow the agency to scrutinize your Venmo account. All these actions impinge on Americans’ freedoms and civil liberties.
Conservatives strongly oppose the CFPB and its actions. Elon Musk and DOGE have gutted the agency while Vivek Ramaswamy explicitly called on Trump to “nullify” the overdraft rule. Additionally, Sen. Ted Cruz (R-TX) introduced legislation to zero out the CFPB’s funding, codifying the abolishment of the agency.
The radical left is intent on controlling Americans by telling them what they think is best. Paternalism at its finest. Congress has a chance to reject liberal policies by overturning the Biden administration’s overdraft rule. But the clock is ticking. There are only a few weeks left for the Senate to use the CRA’s fast-track rules to repeal Biden-era rules that were finalized toward the end of 2024. The fast-track rules allow the Senate to pass a disapproval resolution with only a simple majority, instead of the usual 60 vote threshold. The House Committee on Financial Services already passed the joint resolution to repeal the overdraft rule, but now the full House of Representatives must pass the resolution and send it to the Senate.
Americans should be given more banking options, not less. The government mandate on overdraft is a disaster waiting to happen. Members of Congress have a chance to act quickly and protect their constituents from a radical left-wing takeover of their bank accounts. Time is of the essence.
