SUBSCRIBE TO OUR FREE NEWSLETTER
Daily news & progressive opinion—funded by the people, not the corporations—delivered straight to your inbox.
5
#000000
#FFFFFF
5
#000000
#FFFFFF
cfpb
Trump-Appointed Judge Halts Biden Rule Capping Credit Card Fees
"The U.S. Chamber got its way for now—ensuring families get price-gouged a little longer with credit card late fees as high as $41," one advocate said of the ruling.
May 12, 2024
A Trump-appointed judge on Friday delivered a win for big banks when he granted the U.S. Chamber of Commerce a temporary injunction halting a Biden administration rule that would cap credit card fees at $8.
The Consumer Financial Protection Bureau (CFPB) rule, which would have gone into effect May 14, could save U.S. consumers more than $10 billion each year. The decision to pause its implementation, issued by U.S. District of the Northern District of Texas Judge Mark Pittman, will cost ordinary Americans around $27 million each day it is in effect.
"In their latest in a stack of lawsuits designed to pad record corporate profits at the expense of everyone else, the U.S. Chamber got its way for now—ensuring families get price-gouged a little longer with credit card late fees as high as $41," Liz Zelnick, the director of the Economic Security and Corporate Power Program at Accountable.US, said in a statement.
"It's time the U.S. Chamber stops clogging the courts with baseless lawsuits designed to enrich corporate CEOs on the backs of working families—and it's time the judiciary stops legitimizing venue shopping from big industry."
The CFPB issued the rule on March 5 as part of the Biden administration's commitment to crack down on "junk fees." However, the Chamber of Commerce and other banking trade associations—including the American Bankers Association and the Consumer Bankers Association—quickly sued to block it. The executives of Bank of America, Capital One, Citibank, and JPMorgan Chase sit on the boards of the groups behind the suit, according toThe Washington Post.
"Banks make billions in profits charging excessive late fees," Sen. Elizabeth Warren (D-Mass.) wrote on social media Saturday in response to the ruling. "Now a single Trump-appointed judge sided with bank lobbyists to block the Biden administration's new rule capping these junk fees."
Accountable.US also criticized the fact that the suit was before Pittman at all, arguing that the U.S. Chamber of Commerce filed the suit in Texas federal court so that it would end up under the jurisdiction of the 5th Circuit Court of Appeals, which has 19 Republican-appointed justices out of a total of 26. The chamber has filed nearly two-thirds of its lawsuits since 2017 with courts covered by the 5th Circuit.
"The U.S. Chamber and the big banks they represent have corrupted our judicial system by venue shopping in courtrooms of least resistance, going out of their way to avoid having their lawsuit heard by a fair and neutral federal judge," Zelnick said. "It's time the U.S. Chamber stops clogging the courts with baseless lawsuits designed to enrich corporate CEOs on the backs of working families—and it's time the judiciary stops legitimizing venue shopping from big industry."
The 5th Circuit's treatment of the case has also come under fire, as Trump-appointed Judge Don Willett has not recused himself despite the fact that he owns tens of thousands of dollars in Citigroup shares. While Willett has argued that Citigroup is not a party to the case, it belongs to trade groups that are, and any ruling on credit card fees would significantly impact the bank. Collectively, all the judges on the 5th Circuit have invested as much as $745,000 in credit card or credit issuing companies, according to the most recent publicly available information.
Donald Sherman, Gabe Lezra, and Linnaea Honl-Stuenkel of Citizens for Ethics in Washington wrote: "Judge Willett's refusal to recuse, and the lack of transparency about the rationale, reinforces the need for more judicial ethics reform to ensure that everyday Americans and government agencies have a level playing field when they go into court against corporate interests."
Keep ReadingShow Less
New Rule Under Biden Would Save Americans $10 Billion in Credit Card Fees
"CFPB's new rule demonstrates that policymakers can—and must—take on predatory, deceptive behavior and act as a strong check on corporate power."
Mar 05, 2024
As part of the Biden's administration's efforts to eliminate so-called "junk fees," the Consumer Financial Protection Bureau has finalized a rule that would cap credit card late fees at $8.
The average credit card late fee is $32, so the savings for consumers could be huge. The CFPB estimates that, once it takes effect, the new rule will save Americans over $10 billion a year.
"For over a decade, credit card giants have been exploiting a loophole to harvest billions of dollars in junk fees from American consumers," Rohit Chopra, director of the Consumer Financial Protection Bureau, said Tuesday. "Today's rule ends the era of big credit card companies hiding behind the excuse of inflation when they hike fees on borrowers and boost their own bottom lines."
For over a decade, credit card giants have exploited a loophole to harvest billions of dollars in junk fees from consumers. Today, the @CFPB is closing this loophole and reducing the typical credit card late fee from $32 to $8. https://t.co/yCD7RjZN2p
— Rohit Chopra (@chopracfpb) March 5, 2024
The corporate watchdog Acountable.US praised the move but also noted that it will likely "run into immediate legal and legislative attacks from big banks."
"Big banks have no need to nickel and dime everyday families with hidden, high-cost late fees based on the massive profits they brag about to wealthy investors," said Accountable.US' Liz Zelnick. "Bank industry lobbyists claim junk fees teach responsibility, but families who are price-gouged with late fees as high as $41 buried in the fine print only get a hard lesson in corporate greed."
There's already been some pushback, as the U.S. Chamber of Commerce says it plans to file a lawsuit to block the rule. The lobbying group called the rule "misguided and harmful."
Sen. Elizabeth Warren (D-Mass.), who proposed and established the CFPB, praised the move in a tweet and said it was the "government working for the people, not the big banks."
The CFPB, in its push to reduce or eliminate junk fees, also plans to heavily reduce how much banks can charge for debit card overdraft fees. The new rule for credit card late fees is expected to take effect in June.
"Junk fees, like the excessive late fees credit card companies charge, are yet another tactic corporations use to prey on customers and juice their profit margins even further," said Bilal Baydoun, director of policy and research at the Groundwork Collaborative. "CFPB's new rule demonstrates that policymakers can—and must—take on predatory, deceptive behavior and act as a strong check on corporate power."
Keep ReadingShow Less
Predatory Payday Loan Industry Showers GOP Lawmakers With Cash as CFPB Ruling Looms
"If the Supreme Court doesn't do the industry's bidding by weakening the CFPB, predatory lenders are counting on their MAGA Majority friends to finish the job," said the watchdog group behind a new analysis.
Nov 06, 2023
The payday lending industry has donated tens of thousands of dollars to congressional Republicans who backed a lawsuit asking the U.S. Supreme Court to invalidate the Consumer Financial Protection Bureau's funding structure, a step that would give corporate-friendly GOP lawmakers an opening to gut the agency they've been targeting since its creation.
A new report by the watchdog group Accountable.US—shared exclusively with Common Dreams—shows that the predatory payday loan industry gave at least $82,500 to the campaigns of Republican lawmakers who signed an amicus brief supporting the challenge to the CFPB, whose funding comes from the Federal Reserve system rather than annual congressional appropriations.
At least five Republicans—including Sen. Tim Scott (R-S.C.), the top Republican on the Senate Banking Committee—received a total of $23,400 in campaign contributions from board members of the Community Financial Services Association of America (CFSA) after they signed onto the amicus brief.
The CFSA is an industry trade group that brought the suit against the CFPB, challenging an agency rule targeting the abusive practices of payday lenders. The case has been described as an existential threat to the consumer agency and a potential disaster for the U.S. economy.
A previous analysis by Accountable.US found that CFSA member companies "have histories of criminal behavior or involvement in corruption and ethics scandals, including racketeering convictions, Ponzi scheme payouts, and payments to disgraced politicians."
Rep. Bill Posey (R-Fla.) received $7,500 in campaign donations from the owners of the payday lending company Amscot Financial, a CFSA member, less than two weeks after he backed the amicus brief, which echoes the industry's widely disputed claim that the CFPB's funding structure is unconstitutional. Amscot was charged in the late 1990s with fraud and racketeering, and the company's CEO, Ian MacKechnie, is banned for life from selling insurance in Florida.
"Predatory lenders, including convicted criminals, are greasing the palms of Republicans in Congress who endorsed their legal scheme for gutting the nation's top consumer advocate," said Liz Zelnick, director of the Economic Security and Corporate Power Program at Accountable.US. "It's all part of the plan for payday lenders notorious for trapping families in debt with triple-digit interest rates."
Accountable.US identified 27 Republican supporters of the CFPB challenge who received donations from the payday lending industry following their support for the amicus brief. Eleven of the GOP lawmakers, including Reps. Blaine Luetkemeyer (Mo.) and Bill Huizenga (Mich.), are members of the House Financial Services Committee.
Sen. Roger Wicker (R-Miss.), one of six GOP senators named in the Accountable.US report, got $6,600 in donations from Michael Lynn Hodges, the chairman of Advance Financial, after backing the amicus brief.
In 2019, consumer watchdogs obtained audio of Hodges bragging about how campaign donations bought the payday lending industry access to the Trump White House.
"Since the CFPB's inception, the financial industry and their lackeys in Congress have tried to shut it down all because it's an agency that puts consumers before corporations."
The conservative-dominated U.S. Supreme Court heard oral arguments in CFPB v. CFSA last month, and the justices "appeared highly skeptical that Congress improperly funded the Consumer Financial Protection Bureau by tethering its budget to the Federal Reserve," the American Banker reported at the time.
But the legal uncertainty generated by the case has benefited payday lenders, which profit by offering sky-high-interest loans to struggling Americans.
As The Washington Postreported late last month, payday lenders "have blocked at least five federal investigations into their business practices since the start of last year, part of a broad and aggressive campaign by payday lenders to neuter or eliminate their chief watchdog agency in Washington."
"Some companies have successfully cited the pending Supreme Court decision to slow ongoing CFPB investigations or fight off the agency's recent punishments," the Post found after reviewing court filings. "Top lending executives, meanwhile, have donated generously this year to Republican lawmakers and presidential candidates who previously signaled they could restrain, if not eliminate, the bureau."
Even if the Supreme Court rejects the CFSA's challenge and upholds the CFPB's funding structure—which insulates it from annual political fights over government spending—Republicans who have been hostile to the agency since its establishment in the wake of the 2008 financial crisis are unlikely to stop trying to gut its ability to pursue relief for consumers and impose penalties on lawbreaking corporations.
Rep. Andy Barr (R-Ky.)—who helped lead the anti-CFPB amicus brief—introduced legislation in March that would make the agency's funding subject to the yearly congressional appropriations process, setting the stage for budget cuts. The legislation is just one of the slew of bills Republicans have introduced in their campaign against the CFPB, which has delivered $19 billion in relief to consumers since its creation in 2011.
"If the Supreme Court doesn't do the industry's bidding by weakening the CFPB, predatory lenders are counting on their MAGA Majority friends to finish the job of rolling back consumer protections for millions of Americans," said Zelnick. "Since the CFPB's inception, the financial industry and their lackeys in Congress have tried to shut it down all because it's an agency that puts consumers before corporations."
Keep ReadingShow Less
Most Popular