The lawmakers expressed concerns about the rule’s impact on access to financial services. Credit: Yuriy K/Shutterstock.

The House Financial Services Committee chairman French Hill (R-AR) and Senate Banking Committee chairman Tim Scott (R-SC) have brought in resolutions in the US House and Senate to overturn the Consumer Financial Protection Bureau’s (CFPB) final rule on overdraft fees.

The resolutions were introduced under the Congressional Review Act (CRA), which allows the Congress to nullify federal agency rules through a resolution of disapproval.

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The lawmakers expressed concerns about the rule’s impact on access to financial services and argued that contractually agreed-upon payment structures encourage financial responsibility.

Scott said: “The overdraft rule was yet another example – many consumers rely on overdraft services to make ends meet and limiting this practice will push Americans to riskier financial products.”

The CFPB finalised the overdraft rule on 12 December 2024, describing it as a measure to address an “outdated overdraft loophole” in lending regulations.

The rule, set to take effect on 1 October 2025, will be applicable to banks and credit unions with over $10bn in assets.

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It required affected institutions to either cap overdraft fees at $5, set fee at an amount covering only costs and losses, or follow standard lending laws, including interest rate disclosures.

The CFPB’s action addresses a longstanding regulatory gap that allowed large banks to exclude overdraft fees from being considered a finance charge.

This exemption dates back to 1969, when the Federal Reserve Board decided that overdraft services, typically not for profit but as a courtesy, should not be subject to the Truth in Lending Act (TILA) protections.

Hill said: “The CFPB’s actions on overdraft is another form of government price controls that hurt consumers who deserve financial protections and greater choice.

“Our CRA will help overturn this harmful rule and is a next step toward ensuring the CFPB halts all ongoing rules until it answers to Congress, just like any other non-independent federal agency.”