Patrick McHenryChairman

Washington, March 31, 2022 -

Ahead of today’s hearing on financial fees, Committee Republicans sent a letter outlining Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra’s recent actions that could stifle financial inclusion and eliminate consumer choice. A majority of the Republican Members, led by Ranking Member Patrick McHenry (NC-10) and Consumer Protection and Financial Institutions Subcommittee Ranking Member Blaine Luetkemeyer (MO-03), demanded answers on the CFPB’s efforts to curtail financial institutions’ ability to charge fees—which could endanger the financial products and services Americans rely on.

Read the full letter to CFPB Director Chopra here.

Read key excerpts from the letter to CFPB Director Chopra:

“Dear Director Chopra:

“On January 26, 2022, the Consumer Financial Protection Bureau (CFPB) launched an effort to solicit public comment on consumer financial fees. The stated goal of the Request for Information (RFI) was the CFPB ‘exercising its enforcement, supervision, regulatory, and other authorities’ to address concerns you represent the CFPB has received. For example, the CFPB alluded to hidden or exploitative fees and asked the public to comment on respective experiences with fees linked to deposit accounts, credit cards, remittances and payments, prepaid accounts, and mortgage and other loan types.

“We agree consumer education and simplification of disclosures should be a priority. There is, however, always a cost associated with providing financial services and access to credit. These costs include the risk to the offering firm for such product and credit extensions, which may be offset in part by certain fees for service. Moreover, there are statutory and regulatory requirements in place that guide financial institutions in how to properly communicate these costs, including the Truth In Lending Act (TILA) disclosure requirements and fee disclosures promulgated by the CFPB.

“Furthermore, the CFPB broadly groups all fees associated with consumer products and services as ‘junk fees’ and does not provide any legal definition of the term or any statutory authority to define such a term. The CFPB gives examples of the types of fees on which they are soliciting information including ‘unexpected fees’ and ‘fees that seemed too high.’ However, the CFPB fails to outline any illegal activity taking place regarding fees by financial institutions that would require the CFPB ‘exercising its enforcement, supervision, regulatory, and other authorities.’

…

“Overdraft protection is a short-term liquidity product that can aid consumers in making ends meet when a deposit account balance is low, particularly for those consumers who are unable to qualify for traditional credit products. A recent study indicates most consumers are well aware of the cost associated with tapping into overdraft coverage and choose to use this low-cost option to cover temporary funding shortfalls.  Some financial institutions will derive a higher percentage of revenue from deposit account related fees, such as overdraft or NSF, based on their business models and product offerings. Moreover, in December 2021, Acting Comptroller Hsu outlined potential reforms while cautioning that ‘limiting overdrafts may limit the financial capacity for those who need it most.’

“It is a known fact that smaller financial institutions are struggling to survive and compete in a complex regulatory environment, particularly in the midst of constant technological advancements. Democrats further harmed the viability prospects of community financial institutions by overturning the Office of the Comptroller of the Currency’s 2020 True Lender Rule. This action created legal uncertainty for partnerships between community financial institutions and financial technology (fintech) firms. These partnerships have proven to foster innovation, increase capability, and promote competition in the financial services industry. Consumers ultimately benefit from these partnerships.

…

“A key feature of the U.S. financial system is its wide range of institutions with varied business models and offering a broad selection of products and services to consumers. Any attempts by the CFPB or other financial regulators to stifle financial inclusion or consumer choice or undermine the safety and soundness of particular financial institutions or the financial system as a whole would be imprudent.”

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