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Overdraft Lending: Very Large Financial Institutions (2024)
| What is a significant rule? Significant regulatory action is a term used to describe an agency rule that has had or might have a large impact on the economy, environment, public health, or state or local governments. These actions may also conflict with other rules or presidential priorities. As part of its role in the regulatory review process, the Office of Information and Regulatory Affairs (OIRA) determines which rules meet this definition. |
| Overdraft Lending: Very Large Financial Institutions | |
| Agency: Consumer Financial Protection Bureau | |
| Action: Final rule | |
| Res. of disapproval status: Enacted - rule nullified | |
| Type: Other significant rule | |
| Federal code: 12 CFR Parts 1005 and 1026 | |
| Estimated cost:[1] $0 | |
| Estimated benefit:[1] $0 | |
| Policy topics: Finance | |
The Overdraft Lending: Very Large Financial Institutions rule is a significant rule issued by the Consumer Financial Protection Bureau (CFPB) designed to go into effect on October 1, 2025, that regulates overdraft fees levied by financial institutions with more than $10 billion in assets..[2]
Resolutions of disapproval under the Congressional Review Act were introduced in the US House of Representatives and the US Senate on February 13, 2025. The Senate resolution, S.J.Res.18, passed on March 27, 2025, and the House on April 9, 2025. The rule was repealed under the Congressional Review Act on May 9, 2025.
Timeline
The following timeline details key rulemaking activity:
- May 9, 2025
President Donald Trump (R) signed the resolution into law, repealing the rule.[4]
- April 9, 2025
S.J.Res.18 passed the U.S. House of Representatives.[4]
- March 27, 2025
S.J.Res.18 passed the U.S. Senate.[4]
- February 13, 2025
A resolution of disapproval under the Congressional Review Act, S.J.Res.18, was introduced in the US Senate. Members of the U.S. House of Representatives introduced H.J.Res.59, also challenging the final rule.[4][5]
- October 1, 2025
The final rule will take effect[2]
Background
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This rule amends Regulations Z and E, which (respectively) regulate credit transactions and electronic funds transfers in the consumer finance industry. Under this rule, financial institutions with assets over $10 billion must limit overdraft fees to $5 per transaction or to the level necessary to recoup institutional costs and losses under a formula given in the rule. The rule adds miscellaneous other requirements related to overdraft policies such as a prohibition against mandatory preauthorized electronic fund transfers to repay overdrafts.
Congressional Review Act
- See also: Congressional Review Act
Under the CRA, Congress can nullify recent administrative rules if both the House and the Senate pass a joint resolution of disapproval by a simple majority and the President signs it.
Summary of the rule
The following is a summary of the rule from the rule's entry in the Federal Register:[2]
| “ | The Consumer Financial Protection Bureau (CFPB) amends Regulations E and Z to update regulatory exceptions for overdraft credit provided by very large financial institutions, thereby ensuring that these extensions of overdraft credit adhere to consumer protections required of similarly situated products, unless the overdraft fee is a small amount that only recovers estimated costs and losses.[6] | ” |
Summary of provisions
The following is a summary of the provisions from the rule's entry in the Federal Register:[2]
| “ | As described more fully below, the CFPB proposed to amend Regulations Z and E, and accompanying commentary as they relate to overdraft credit. The amendments would have applied only to very large financial institutions— i.e., insured depository institutions and credit unions with more than $10 billion in assets.[6] | ” |
Significant impact
The 1996 Congressional Review Act created a way for Congress and the President to review and repeal final rules promulgated by federal agencies. Congress can pass a joint resolution disapproving of the rule within 60 days of the rule's publication to the Federal Register and congressional notification of the final rule. CRA resolutions need a simple majority to pass each house. If the resolution is signed by the president the rule is repealed, and the issuing agency is barred from reissuing the rule or creating new rules that are what the CRA calls "substantially the same" without authorization.[7][8][9]
According to the Congressional Research Service, regulations meeting the CRA's definition of a major rule face two additional requirements under the act: a review by the Government Accountability Office of the issuing agency's compliance with rulemaking procedures, and a possible delay of the rule's effective date in order to provide Congress with "additional time to consider whether to overturn a major rule before it goes into effect."[9]
The Congressional Review Act defines major rules as "likely to result in (1) an annual effect on the economy of $100 million or more; (2) a major increase in costs or prices for consumers, individual industries, federal, state, or local government agencies, or geographic regions; or (3) significant adverse effects on competition, employment, investment, productivity, or innovation, or on the ability of United States-based enterprises to compete with foreign-based enterprises in domestic and export markets," according to the U.S. Government Accountability Office.[10]
The text of the Exception to Restrictions on Private Transfer Fee Covenants for Loans Meeting Certain Duty To Serve Shared Equity Loan Program Requirements rule states that Office of Management and Budget deemed this a major rule:
| “ | The Office of Information and Regulatory Affairs has designated this rule as a 'major rule' as defined by 5 U.S.C. 804(2).[6] | ” |
Text of the rule
The full text of the rule is available below:[2]
See also
- Overview of significant federal agency rules
- Overview of significant federal agency rules (2024)
- Significant rule
- REINS Act
- Congressional Review Act
External links
Footnotes
- ↑ 1.0 1.1 Note: Estimated costs and estimated benefits here refer to estimated quantitative costs represented by dollar amounts. The estimates are a required part of the rulemaking process and are provided in the rule text. For qualitative costs or benefits, see the summaries of rule purpose and provisions.
- ↑ 2.0 2.1 2.2 2.3 2.4 2.5 Federal Register, Overdraft Lending: Very Large Financial Institutions, accessed May 8, 2025
- ↑ Federal Register, Overdraft Lending: Very Large Financial Institutions, accessed May 8, 2025
- ↑ 4.0 4.1 4.2 4.3 Congress.gov, "Senate Joint Resolution 18," accessed April 3, 2025
- ↑ Congress.gov, "House Joint Resolution 59," accessed April 3, 2025
- ↑ 6.0 6.1 6.2 Note: This text is quoted verbatim from the original source. Any inconsistencies are attributable to the original source.
- ↑ U.S. News, "Democrats Push to Repeal Congressional Review Act," June 1, 2017
- ↑ The Hill, "The Congressional Review Act and a deregulatory agenda for Trump's second year," March 31, 2017
- ↑ 9.0 9.1 Congressional Research Service, "The Congressional Review Act: Frequently Asked Questions," November 17, 2016
- ↑ U.S. Government Accountability Office, "Congressional Review Act FAQs," accessed July 15, 2017
