CFPB finalized its overdraft fee rule, blazing forward with ‘business as usual’

The news: The Consumer Financial Protection Bureau (CFPB) introduced its final rule on overdraft fees, closing a loophole that exempted overdraft loans from lending laws, per the regulator. This rule will go into effect in October 2025.

The details: The rule applies to financial institutions (FIs) with over $10 billion in assets that will now be required to choose one of the following options: 

• Charge a fee that covers only costs and losses
• Cap the fee at $5
• Comply with lending laws for profit-generating overdraft loans, including clear interest rate disclosures

How we got here: While most financial regulators have paused their agendas during the transition to President-elect Donald Trump, the CFPB maintains a “business as usual” approach.

• Its director, Rohit Chopra testified before the Senate Banking Committee that he would not resign when President-elect Trump takes office but would leave if fired.

Next steps: The regulator’s agenda will likely shift drastically under new leadership.

• According to the Supreme Court, the Director of the CFPB is an “at-will employee” of the President. Experts anticipate Rohit Chopra will vacate the office shortly after Inauguration Day, per Bloomberg.
• That means unpopular rules could be reversed under the new administration.

But for now, affected FIs should prepare to comply with the new rule and smaller, exempt FIs should also adjust overdraft fees to remain competitive with larger counterparts.

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