Chairman Sherrod Brown (D-OH) questions Treasury Secretary Janet Yellen and Federal Reserve Chairman Powell during a Senate Banking, Housing and Urban Affairs Committee hearing on the CARES Act, at the Hart Senate Office Building in Washington, DC, September 28, 2021.
Kevin Dietsch | Pool | Reuters
The Senate Committee on Banking, Housing and Urban Affairs scrutinized predatory fees charged by banks and other financial institutions during a Tuesday oversight hearing of regulators.
Committee Chairman Sen. Sherrod Brown, D-Ohio, said the biggest banks and credit unions are doing well despite historic inflation and economic uncertainty. Even so, he contended they are not passing along those benefits to their customers, “penalizing Americans who are trying to build businesses already struggling under the weight of inflation.”
“Workers and small businesses who are already struggling under the weight of inflation shouldn’t get hit with exorbitant bank fees, lose their money to a crypto scam, or worry that their savings will disappear overnight if a mismanaged bank or credit union fails,” Brown said during the hearing.
The hearing comes weeks after the Consumer Financial Protection Bureau issued guidance to end surprise overdraft and bounced check fees. These fees are “likely unfair and unlawful,” CFPB said in a statement.
Todd M. Harper, chairman of the independent federal agency the National Credit Union Administration, told the committee that the agency is examining possible overreliance on overdraft protection programs. He said the overdraft fees charged by some credit unions “can be detrimental to members and inconsistent with the system’s mission.”
Agency examiners are requesting audits of credit union overdraft programs, including information about overdraft policies and procedures. The NCUA is also reviewing credit union communications with members about the overdraft programs in preparation for a more thorough review in 2023.
“Ultimately, the NCUA recognizes that a strengthened consumer compliance program is in the best interest of the system and its members,” Harper said.
More broadly, acting Comptroller of the Currency Michael J. Hsu said his office is committed to addressing inequities in the banking system by encouraging banks to revisit their fee systems.
Hsu cited a 2022 report that showed the largest U.S. banks supervised by the agency have saved consumers more than $4 billion annually by “lowering penalty fees for overdrafts, reducing the daily maximum number of overdraft fees that are charged, adding a grace period or buffer amount before fees kick in, or eliminating nonsufficient funds fees or overdraft transfer fees.”
“Our mission is to ensure that national banks and federal savings associations operate in a safe and sound manner, provide fair access to financial services, treat customers fairly, and comply with applicable laws and regulations,” Hsu said.
Brown, a political populist who has long scrutinized the banking industry, said he wants government regulators to take steps to help “more Americans save money, build wealth, start small businesses and participate in our economy.”
“Our financial regulators have answered that call, and I will continue to work with them to make sure our banking and credit union system works for everyone,” Brown said.