WASHINGTON — The 's ambitious rule proposal to crack down on credit card late fees, for credit card companies, will potentially , nearly a year after it was released.
Global corporations and small banks alike are pushing back against the impending rule finalization with some help from business-friendly lawmakers.
Rep. Andy Barr, R-Ky., called the proposal, which is projected to save consumers nearly $12 billion each year by at as little as $8, in the long term.
The chair of a House subcommittee on financial institutions and monetary policy called on the Government Accountability Office to study the rule's potential impacts weeks before it is set to go into effect.
The CFPB would not confirm when the rule would be finalized, but interest groups say banks are not yet signaling a preemptive fee change akin to their response to a proposal to .
Late fees, which under a legislative allowing banks to charge unimpeded under a certain threshold, disproportionately poor Americans and those with low credit scores, the reported.
The said fees "play an important role" in encouraging timely payments and avoiding added interest in its on the proposal.
"In contrast to the CFPB's unfounded statements, late fees are not impermissible, so-called 'junk fees' that fail to serve any purpose," the Chamber wrote, referencing the Biden administration's overall initiative to . "Instead, they are heavily regulated by the CFPB, and the Federal Reserve before it."
The Chamber submitted one of about 1,000 objecting to the proposal, out of a total of 57,000 comments, according to Accountable.US, a nonpartisan government watchdog group. The other 56,000 comments were in support of the caps.
The $8 fee is also not reflective of the costs of collections for credit unions, Greg Mesack, senior vice president of government affairs at the , told CNBC. The organization spent in Q1 of 2023, according to a Senate lobbying disclosure.
In its against the rule, the association argued that credit unions usually offer their members lower rates for services such as car loans and mortgages compared to big banks.
"We're going to lose extreme amounts of money every time someone's late," Mesack said. The fee, he added, is not enough of a deterrent, "so more people are likely to be late."
"A lot of credit unions will have to face the consequences of potentially limiting their credit card programs, which at that point it makes them not competitive with the big banks," Mesack said.
CFPB consulted the National Credit Union Administration Board, along with the Comptroller of the Currency and the board of directors of the Federal Deposit Insurance Corporation, when constructing the proposal, according to a .
Late fees upward of $41 "are significantly higher than the pre-charge-off collection costs" cited by an unnamed credit union trade group, per the NPRM.
Instead, the $8 fee cap shows the CFPB "dug down, did their research, looked at industry data and came out with a number that they thought best reflected a bank's ability to recover the cost associated with a late payment," said Shahid Naeem, senior policy analyst at AELP.
"The fact that the CFPB has determined that $8 is sufficient to cover the costs and banks are charging $41, that's significant," said Christine Hines, a legislative director for the National Association of Consumer Advocates. "And it shows that somewhere, there's conduct that needs to be curbed. Clearly."
CFPB Director Rohit Chopra told senators last month that banks should support the proposal "if it's not a core part of their profit model."
Credit card companies spent a in 2022 on lobbying, according to records database Open Secrets. That year, total outstanding credit card debt surpassed for the first time since CFPB began collecting the data.
Companies have spent so far in 2023.
"In a sense, these big financial firms, they have so much power, they have so much money and they're waging a war on regulation," Naeem told CNBC.
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