The League joined 17 credit union leagues and associations in filing an amicus brief supporting America’s Credit Unions’ recent federal lawsuit challenging the Consumer Financial Protection Bureau’s final rule that sets a fee cap on overdraft protection programs.
The amicus brief highlights the significance of credit unions’ unique member-owner relationship, which is fundamental to the mission of serving their communities. The CFPB’s final rule focuses on calculating costs and assessing fees, failing to account for credit unions’ unique capital and operational realities. The final rule was developed with data from five financial institutions that do not represent the diversity of the financial services industry.
The CFPB’s finalized rule disregards decades of precedent set by the Federal Reserve Board. Consumers who have previously opted into overdraft programs may not qualify under the CFPB’s new final overdraft rule. Ultimately, the rule threatens to reduce access to financial services in rural areas and underserved communities.
Paul Mercer, president of the Ohio Credit Union League, which spearheaded the initial legal response to the CFPB’s rule in conjunction with America’s Credit Unions, emphasized that member choice and transparency remain paramount.
“Consumers and credit unions of all sizes would unintentionally bear the negative brunt of the CFPB’s misdirected rule,” he said. “The fee cap ignores market realities—overdraft programs are a costly, and mostly break even, service for credit unions. But they are widely used, offering members a lifeline from their trusted financial cooperative when they need it most. We must preserve credit unions’ ability to remain autonomous in serving their members.”
The current regulatory framework ensures that existing products and services are reasonable and fully disclosed. Credit unions provide members with clear options to opt out of overdraft protection, obligating members to utilize an overdraft protection service goes against credit unions’ standards.
