A top U.S. consumer watchdog is preparing to make it much harder for banks to charge clients overdraft fees — setting up a clash with financial firms over billions of dollars in annual revenue.
Consumer Financial Protection Bureau officials have privately told industry executives that the regulator will likely unveil its long-awaited plan to crack down in December, according to people familiar with the discussions. The CFPB has been crafting the regulations for months.
Washington has been clamping down on overdraft charges, which the Biden administration has dubbed “junk fees.” The CFPB, which declined to comment on the timing of its plans, has said banks got nearly $8.5 billion in 2021 from insufficient fund and certain low-balance fees.
Wells Fargo & Co. reached a $3.7 billion settlement with federal regulators in December to settle allegations it illegally charged “surprise” overdraft fees, among other claims. Regions Financial Corp. agreed to pay $191 million to settle a similar case in September 2022, and the CFPB called the bank a “repeat offender.” Neither bank admitted or denied the regulator’s allegations.