Under Chopra, strong action on student loans would be pretty much a given. But there are so many other things the CFPB could do that would really help people—we are, after all, talking about an agency that extracted $12 billion in fines and money to consumers under Obama, only to plummet to $1.4 billion between 2018 (when Kraninger took over) and November 2020.
The coronavirus pandemic is also creating a lot of consumers in need of protection from financial institutions, and one of the big things Chopra could zero in on would be bank overdraft fees, which have been a booming business for banks in this time of high unemployment. Federal regulators urged banks to waive overdraft fees during the pandemic, but instead they accounted for $30 billion to banks in 2020, with the average overdraft fee setting a new record at $33.47. So if you didn’t have money in your account to cover a scheduled bill, or you stay housed by writing a rent check for a little more than is in your account, you might be charged $35 of money that the bank 100% knows you don’t have. Many of these fees are triggered by debit card transactions for less than $25 that are repaid within three days.
Around one in three checking accounts has at least one overdraft a year, and 5% of checking account holders have 20 or more overdrafts a year. In the pandemic, with the accompanying economic hardship, that’s been exacerbated. People have even seen stimulus checks that were deposited into checking accounts with negative balances, thanks to overdrafts, eaten up completely. Some banks have zeroed out negative balances for long enough to allow people to get their stimulus checks, but not all of them.
The Consumer Financial Protection Bureau could do something about predatory overdraft policies, including ridiculously high fees. During the pandemic, that’s especially critical. One poll found 79% support for eliminating overdraft fees during this crisis. Sens. Cory Booker and Sherrod Brown already proposed legislation to crack down on overdraft fees during the COVID-19 emergency, banning them altogether for the duration of the emergency and preventing banks from reporting overdrafts to credit reporting agencies.
But even separate from the pandemic, the CFPB could and should strengthen overdraft protections, including a strong opt-in rule on overdrafts—many people would rather have a transaction declined than get their cup of coffee and then be hit with a $35 fee for it—and barring “practices that increase overdraft fees, including posting transactions in order from highest to lowest and charging fees on transactions that were authorized against available funds.”
There are so many things a strong government can do for people. It’s time to get to work showing people the benefits of that.