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The U.S. Senate voted Thursday to overturn a major consumer protection rule that would have capped most bank overdraft fees at $5, a move that consumer advocates say will cost American families billions each year.
The nearly party-line 52–48 vote reversed a rule adopted in December by the Consumer Financial Protection Bureau (CFPB), which sought to rein in fees that typically range from $30 to $35 when customers spend more than they have in their checking accounts. The bureau had estimated the rule would save households more than $5 billion annually.
Senator Josh Hawley of Missouri was the only Republican to vote against the resolution, which now advances to the House of Representatives, where a parallel measure was introduced by Rep. French Hill (R-Ark.), chair of the House Financial Services Committee.
The rollback was made possible by the Congressional Review Act, which allows Congress to swiftly overturn newly finalized regulations with a simple majority and without the threat of a filibuster. The CFPB’s rule was set to take effect in late 2025.
Consumer advocates condemned the Senate’s action, warning it would allow banks and credit unions to continue charging fees far exceeding the actual cost of overdraft services.
“Repealing the CFPB’s overdraft fee limits will hurt working families who are already struggling with high prices and inflation,” said Chuck Bell, advocacy program director at Consumer Reports.
The rule had faced immediate pushback from the banking industry, with several trade associations filing lawsuits to block it. The American Bankers Association (ABA), a plaintiff in the legal challenge, applauded the Senate’s vote.
“If implemented, the CFPB’s 11th-hour rule imposing government price controls would force many banks to limit or eliminate overdraft protection as we know it,” said Rob Nichols, ABA president and CEO. “Many Americans would be driven to less regulated and higher-risk non-bank lenders to cover unexpected or emergency expenses.”
Overdraft fees have long been a lucrative revenue stream for financial institutions, generating billions annually. Critics say they disproportionately affect low-income and minority communities, who are more likely to rely on overdraft protection for routine expenses.
Democrats in the House are preparing to oppose the resolution, hoping to leverage the chamber’s narrow GOP majority to block its passage. The vote has become a flashpoint in the broader battle over financial regulation, consumer protections, and the role of government oversight in pricing.
“This is a clear giveaway to the banking lobby at the expense of hardworking Americans,” said one Democratic aide familiar with House leadership strategy.
If the resolution succeeds in the House and is signed by the president, the CFPB will be barred from issuing a similar rule in the future without new legislation—a long-term victory for the banking industry and a major setback for the Biden administration’s consumer protection agenda.
As the battle shifts to the House, consumer advocates warn that millions of Americans may continue to face steep penalties for minor overdrafts—costs that many families can ill afford
