Because the Trump administration rolls again monetary regulation designed to guard American customers, a bunch of Democratic senators led by Elizabeth Warren (D-Mass.) is demanding solutions from main banks, together with JPMorgan and Wells Fargo, on the potential affect.
In a letter despatched to 25 banks on Tuesday, Warren, alongside Sen. Richard Blumenthal (D-Conn.) and Sen. Bernie Sanders (D-Vt.), requested info on overdraft charges, or costs imposed by banks when customers spend more cash than they’ve of their accounts.
The Client Monetary Safety Bureau, an company designed partially by Warren as a part of the Dodd-Frank monetary reforms, finalized a rule in late 2024 that closed a loophole permitting banks to cost exorbitant overdraft charges. In response to the letter despatched on Tuesday, since 2022, CFPB supervisory actions associated to overdraft charges have led to almost $250 million refunded to customers. President Trump signed a Republican-led invoice into regulation in Might 2025 that overturned the rule.
The letter comes amid a broader authorized combat between Democratic lawmakers and the Trump administration, which has sought to put off 90% of employees on the CFPB and reverse a lot of its current rulemaking, together with round open banking, or the flexibility for customers to switch their very own monetary knowledge between completely different establishments.
The way forward for the CFPB
Whereas lots of the U.S. regulatory businesses, such because the Securities and Alternate Fee, are targeted on supervising main monetary establishments, the CFPB is the one physique whose main mandate is implementing shopper rights, with its authority rooted within the 2008 monetary disaster. Since its creation, the bureau has turn into a lightning rod for conservatives, with Republican lawmakers lengthy looking for to finish its funding and prohibit its authority.
Although opponents of the bureau have confronted authorized boundaries, the Trump administration engaged in a marketing campaign to successfully intestine the CFPB by shedding the overwhelming majority of its staff and staffing it with members of Elon Musk’s Division of Authorities Effectivity, or DOGE. Courts are nonetheless litigating the reforms, although the bureau’s enforcement exercise has been considerably scaled again.
That has included Biden-era rulemaking, together with provisions associated to overdraft charges—one of many bureau’s landmark reforms of the previous few years. The letter despatched by the Democratic senators on Tuesday focused the ten banks that collected probably the most in overdraft income, which they stated represents tens of hundreds of thousands of {dollars}.
Democrats have argued that overdraft charges can function a type of debanking, or eradicating entry to banks for various kinds of customers—a follow that the Trump administration and lots of of its supporters have tried to finish. In Tuesday’s letter, the authors stated that overdraft charges overwhelmingly goal lower-income People, with almost 80% of overdraft-related charges charged to lower than 10 p.c of accounts. They estimated the rule would have saved customers as much as $3.5 billion yearly. In response to the Senate banking committee minority, one of many banks focused by the letter, Residents Financial institution, costs $35 per incident with as much as 5 costs per day and earned $100 million in overdraft income in 2023.
The 2024 CFPB rule would have nonetheless allowed bigger banks to cost overdraft charges, however restricted them to a $5, or alternatively the prices of offering overdraft providers, and categorized them underneath lending legal guidelines. Republican lawmakers, reminiscent of Home Monetary Providers Committee chair French Hill (R-Ark.), have argued that they don’t need the federal authorities setting costs.
With the Democrats within the Senate minority, Warren has considerably much less energy because the rating member of the banking committee. With Tuesday’s letter, she’s aiming to gather extra knowledge on how the rollback of the rule has modified the banks’ method to overdraft charges.
“Trump’s chaotic, half-baked insurance policies are wreaking havoc on the financial system,” the senators wrote. “Elevating overdraft charges within the wake of the repeal of this rule could be inexcusable.”
