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1 1 (February 24, 2025)

handle is hein.crs/govesol0001 and id is 1 raw text is: Congressional ~'a esearch Service CFPB Finalizes Overdraft Rule, Related Legislation February 24, 2025 Overdraft refers to when the money in a consumer account cannot cover a given transaction, but a financial institution pays the transaction. While some financial institutions do not offer overdraft coverage, banks that do typically charge a fee for covering each overdraft, often around $35. The Consumer Financial Protection Bureau (CFPB) finalized a rule in January 2025 that would cap the overdraft fee at either $5 or an alternative price at institution costs. Alternatively, financial institutions could provide additional disclosures as required of credit subject to the Truth in Lending Act (TILA). Legislation introduced in the 119th Congress would overturn this recent rule using the Congressional Review Act (CRA): H.J.Res. 59 and S.J.Res. 18. Overview of Overdraft and Recent Trends Many financial institutions offer overdraft protections with different terms and conditions. Overdraft fees have generally been an increasingly significant component ofnoninterest bank income over the past 40 years, though the trend has reversed recently. From 2020 to 2023, research from the CFPB shown in Figure 1 found that banks had reduced their revenue from overdraft and non-sufficient fund (NSF) fees by nearly 50%. This comes as some financial institutions have adjusted overdraft and NSF fee policies, including reducing overdraft fees, instituting grace periods, or eliminating these fees altogether. Other fee revenue remained flat from 2019 to 2023 even as overdraft/NSF revenue declined. Congressional Research Service https://crsreports.congress.gov IN12513 CRS INSIGHT Prepared for Members and Committees of Congress -