By Alex Milliken, National Taxpayers Union
While taxpayers look for relief from out-of-control inflation, the Consumer Financial Protection Bureau (CFPB) continues to attack the financial industry, tipping our already unstable economy further over the edge.
In a recent announcement, CFPB issued an advance notice of proposed rulemaking that is asking for insight on current late fees financial institutions charge. Most but not all banks utilize these fees to pay for the myriad of services they offer. In recent weeks financial institutions have announced their own curtailing of fees to better assist their lower income users who may be experiencing financial hardship, in large part due to the ongoing recovery from the COVID-19 pandemic.
As an example, Bank of America estimates that these fees only made up one percent of its 2021 revenue, and changes in charges across the industry for overdraft or late fees in recent years have led to reduced overdraft fee revenue by 97 percent from 2009.
This is only the latest example of a power grab from CFPB. As recently as April CFPB announced they would be invoking a long dormant authority to examine nonbank financial companies or “fintech” companies. CFPB inaccurately posits that these nonbank entities are harmful to consumers, however these companies often represent some of the only credit available to struggling Americans who have been continuously left behind by traditional institutions.
At a time when the economy is faltering and everyday Americans’ financial futures are so uncertain, the CFPB’s action seems misplaced. According to a survey conducted by Plaid, the percentage of U.S. consumers using fintech swelled to 88 percent in 2021, with 95 percent of millennials utilizing these non traditional services.
CFPB Director Rohit Chopra said in a recent statement that these actions are “particularly timely since current rules might give companies the incentive to impose big hikes based on inflation.” However, in many cases these institutions are doing the exact opposite of what CFPB claims, they are providing a lifeline to their users and breaking barriers to traditional institutions.
What is timely about CFPB’s decision is the recent jockeying for oversight of the fintech industry from a multitude of federal agencies. President Biden signed an executive order in March 2022 requiring more than 17 federal agency heads as well as CFPB, the Federal Trade Commission, the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency to form an interagency group to “ensure the responsible development of digital assets.”
Since this order, numerous agencies have taken action including the SEC Chair Gensler calling for enhanced investor protections following a market dip, as well as the SEC doubling their Crypto Enforcement Unit, House Democrats calling for the Environmental Protection Agency to investigate the impact of crypto mining on the environment, as well as the SEC requesting joint oversight of cryptocurrencies with CFTC.
As long as the federal government remains unsure of who exactly has the authority over theseemerging technologies, we can expect to see continued power grabs and poor policy decisions from a bevy of agencies.
Alex Milliken is a Policy and Government Affairs Manager for National Taxpayers Union.