Senate Republicans vote to let banks gouge customers with higher overdraft fees

26 March

Senate Majority Leader John Thune (R-SD) speaks with reporters following the Senate Republicans' weekly policy lunch on Capitol Hill in Washington, D.C., U.S., March 11, 2025. REUTERS/Nathan Howard

The U.S. Senate just advanced a resolution on a party-line vote to give banks more leeway to charge customers exorbitant fees if they don't have enough money in their accounts.

On Wednesday, senators passed a bill by Sen. Tim Scott (R-S.C.), who chairs the Senate Banking Committee, aimed at undoing a rule imposed by the Consumer Financial Protection Bureau (CFPB) under former President Joe Biden to cap overdraft fees at just $5. The rule was set to go into effect in October, though if it passes the House and is signed into law by President Donald Trump, it will never go into effect. Banks' overdraft fees can be as high as $35.

While Senate rules normally allow the minority to filibuster legislation to where it can't pass without 60 votes, Wednesday's vote was done as a Congressional Review Act (CRA) resolution. As the American Prospect reported, CRA resolutions "cannot be stopped by a filibuster," meaning Wednesday's 52-47 vote in the Senate is final.

As Sen. Elizabeth Warren (D-Mass.) — who is the ranking member on the Banking Committee — explained in her Senate floor speech, the CFPB rule in question allows for banks to recoup all losses associated with a customer drawing funds they don't have, which is typically less than five dollars. And if a bank can demonstrate that their losses for an overdraft were more than $5, they can recoup the full amount.

However, Warren pointed out that many commercial banks "play a game of gotcha" by stacking customers' transactions in a way that maximizes overdraft fees. She further elaborated that revenue from overdrafts disproportionately impacts low-income Americans, and can cost them more than $400 per year.

"$400 can be the cost of a mortgage payment or rent for someone with a modest income. $400 can be the difference between their kids' medication or just going without. $400 for some families can be several weeks' worth of groceries," Warren said. "This money matters to millions of families. Altogether the CFB rule saves American families up to $5 billion a year."

"Republicans say they care about lowering costs," she continued. "But overturning this rule will make big banks richer, and hard-working families poorer."

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