The CFPB’s $5 Billion Stocking Stuffer
How do you turn a $5 trip to the convenience store into a $40 trip? Start with $3 in your checking account, a hankering for a seasonal cranberry lemon-lime soda (unappetizing, but undeniably festive), and a bank that charges exorbitant overdraft fees.
That is, before the Consumer Financial Protection Bureau (CFPB) stepped in earlier this month with a long-awaited final rule.
You’re hit with an overdraft fee when you swipe your debit card for more money than you have in your account. If your bank offers what is often called overdraft “protection,” you’ll still be able to buy your drink, but it’ll charge you for accidentally going over your balance. The fee varies by bank but once could have been as high as $35. And banks made bank on overdraft; in 2019, a group of around 600 institutions made $11.9 billion from overdraft (and non-sufficient funds) fees alone.
The CFPB, the consumer protection equivalent of Santa Claus, brought a tremendous gift in its multi-billion-dollar sack of consumer relief: a final rule to close the loophole that lets banks charge excess overdraft, expected to save people across the country $5 billion a year and $225 per household that pay these fees. Banks and credit unions with more than $10 billion in assets can choose to charge $5 per overage (or enough to cover the institutions’ costs), or continue offering overdraft lines of credit that comply with the same disclosure requirements as credit cards.
Americans for Financial Reform Education Fund applauds the rule. Said AFREF’s Amanda Jackson:
This rule will promote straightforward, more just, and more affordable checking accounts and prevent big banks from charging junk fees that push people out of the banking system. Today’s rule will support Black and Latine customers, who pay twice as much in banking fees as white customers.
And it’s not the first time the CFPB has moved against sky-high overdraft. The agency has clamped down on banks taking overdraft fees without customer consent. And it’s part of its broader push against junk fees – the tacked-on, often-hidden fees that make everyday life more expensive. Said AFREF’s Christine Zinner: “Without these protections, overdraft fees are just another predatory, junk fee that drains people’s savings.”
This good work is worth remembering as Elon Musk and Vivek Ramaswamy’s DOGE angles at killing the agency, while Silicon Valley billionaires whine about anything the government does to help the little folk, as AFR’s Christine Zinner wrote in the Los Angeles Times.
Musk and Andreessen are the leading edge of a false populism that hides an agenda that will unfold over the next four years designed to benefit the wealthy at everyone else’s expense. They can launch a campaign against the Consumer Financial Protection Bureau, but they can’t change the facts or draw the battle lines: On one side are a handful of Wall Street bankers, payday lenders and Silicon Valley billionaires, who make money by breaking the rules. On the other side are the vast majority of Americans, who benefit from and value the bureau’s crucial work — but don’t have a billionaire’s megaphone.
This is the last Financial Justice this year. Happy holidays to the CFPB, and to all a great new year!
BANKING AND FINANCIAL STABILITY: Hill in the House – Managing Someone Else’s Risk –Shadow Banks – A Big Bank Union – The Accountable Capitalism Act – SVB Suit
CONSUMER: Zelle in a Hand Basket – Save the CFPB – Credit Card Late Fees – Protecting Financial Abuse Survivors – Medical Debt – Sick with Debt – Debt Collectors – Customer Service – Changing Interchange? – Credit Card Rewards
CAPITAL MARKETS: ESG, DEI, SEC – Trying to Confirm SEC Commissioner Crenshaw
PRIVATE MARKETS: The Power of Data – Grocery Growth – PE & Healthcare – Other Private Markets News
CRYPTO: Unstable Coins – Financial Crisis – Debunking Debanking – The Crypto Czar – Criminals’ Crypto and the White House – SEC Swap – Circle x Binance – Bitcoin Activism
HOUSING: Realtors and Conservatives – Fannie/Freddie – Nonbanks – Unaffordable Rent – Death, Divorce, Mortgages
CLIMATE AND FINANCE: Pensions Burning Out – Insuring the Future – Green Loans – Natural Gas
Feedback? Reach us at afrnews@ourfinancialsecurity.org
BANKING AND FINANCIAL STABILITY
Hill in the House.
Arkansas Republican Rep. French Hill is one step closer to heading House Financial Services – the congressional committee that oversees policy addressing consumer, financial and housing issues – only a month after he unveiled a policy outline to undermine federal regulators, called “Making Community Banking Great Again.” Hill is also notably pro-crypto and has tons of Silicon Valley connections.
Managing Someone Else’s Risk.
In March 2021, a private asset manager called Archegos collapsed after a series of investments went sour, hitting major banks that were exposed to $10 billion in losses. The crisis ignited questions about how banks lent money to and oversaw their nonbank clients, relying on 25-year-old rules on “counterparty credit risk management.” Earlier this month, the Basel Committee on Banking Supervision (the international body of financial regulators, including the U.S. Treasury Department) issued a long-awaited update to the rules, implementing practices to conduct due diligence at every stage of a bank’s relationship with a nonbank, create strategies to mitigate credit risk, measure and control the risk, and create a governance framework.
Shadow Banks.
The Financial Stability Board issued eight recommendations urging shadow banks, like private credit lenders, brokerages, hedge funds, and insurers, to fortify themselves against economic crises. This plan follows cases of “inadequate liquidity preparedness” when faced with shocks during market crises. Contingency funding plans are needed to handle sudden spikes in collateral demands during market stress to help nonbank financial institutions ride out uncertainty against future disruptions.
A Big Bank Union.
Wells Fargo workers in the conduct management intake group voted to unionize, marking the first non-branch union within the bank. This follows recent unionization efforts at 23 Wells Fargo branches. The decision highlights grievances over revoked work-from-home privileges, job security, and offshoring of roles to India. Despite layoffs impacting several pro-union employees, the unionization push succeeded. The move signals growing momentum for unionization in the banking sector, in which currently only 1.2% of workers are unionized.
The Accountable Capitalism Act.
Senator Elizabeth Warren has re-introduced the Accountable Capitalism Act, aiming to shift corporate priorities from maximizing shareholder value to supporting workers and stakeholders. The bill requires that companies with over $1 billion in revenue obtain a federal charter, include 40 percent employee-elected board members, and limit executives’ ability to sell stock quickly. It also mandates 75 percent shareholder approval for political spending.
SVB Suit.
The FDIC plans to sue former Silicon Valley Bank executives, alleging mismanagement that resulted in the bank’s collapse and the resulting $23 billion hit to the federal deposit insurance fund.
CONSUMER
Zelle in a Hand Basket.
On Friday, the CFPB sued the operator of Zelle – an online, peer-to-peer payments service – and three of the nation’s largest banks for failing to protect consumers from fraud. Bank of America, JPMorgan Chase and Wells Fargo have all been implicated in rushing the platform to market and neglecting to include consumer safeguards, costing customers an estimated $870 million. Said AFR’s Christine Chen Zinner:
Payment apps like Zelle should bring safety along with the convenience of transferring funds digitally. As traditional large financial institutions seek to offer advanced technology and so-called fintech products, these banks must meet their obligation to be both sound and meet federal consumer protection standards.
Save the CFPB.
Senator Elizabeth Warren defended the CFPB amid Republican calls to dismantle the agency, highlighting its role as a critical safeguard against financial abuse. Since its creation after the 2008 financial crisis, the CFPB has recovered $21 billion for consumers and protected millions from predatory practices by holding banks accountable for wrongful repossessions, junk fees, and deceptive lending schemes. CFPB Director Rohit Chopra implied that he won’t step down when Trump takes office, leaving it up to the new president to fire him. Sen. Warren argues that if Trump genuinely wants to protect regular Americans, he shouldn’t support efforts to destroy the CFPB.
Credit Card Late Fees.
Federal Judge Mark T. Pittman blocked the CFPB’s rule to cap credit card late fees at $8, ruling that the CFPB overstepped its authority by ignoring the deterrence effect of penalty fees. The decision came at the behest of trade groups like the U.S. Chamber of Commerce and American Bankers Association. Consumers stand to gain $10 billion from the rule, which has been stayed in the Fifth Circuit for months; AFR’s Wall Street Ripoff Counter is tracking the losses to consumers.
Protecting Financial Abuse Survivors.
The CFPB wants to limit the financial damage incurred by survivors of domestic violence and elder abuse, aiming to issue a proposed rule sometime in the future. Abusers often force their partner or family to take on debt, secretly open new accounts in their names, force them to sign financial documents, or pile charges on existing accounts. AFR supported the petition urging the CFPB to issue rules to protect the survivors of intimate partner abuse from coerced debt. Wrote the agency:
…This type of financial abuse creates substantial, long-lasting harm for survivors. For example, nearly three-quarters of domestic violence survivors report staying longer in abusive relationships in part because of coerced debt. The impact falls particularly hard on women of color, who face higher rates of financial abuse resulting in nearly double the average debt burden.
Medical Debt.
The CFPB wanted to rein in how medical debts are collected. ACA International, a trade association representing debt collectors, didn’t want that, so they sued. This week, a federal judge refused to issue an injunction against the guidance.
Sick with Debt.
A recent SSM - Mental Health study reveals that debt burdens leave individuals feeling sick. The ongoing and complex effort it takes in managing multiple, overlapping debts leads to chronic stress, anxiety, and poor health. The continuous cycle of debt is compounded by financialization of the U.S. economy, stagnant wages, and systemic racial inequalities, making repayment difficult and negatively affecting physical and mental health.
Debt Collectors.
A report, No Fresh Start, from the National Consumer Law Center scrutinizes whether states are doing enough to exempt creditors and other debt collectors from seizing families’ income and property. All except for five states and Puerto Rico have what the group calls “strong protections.” The other 45 have glaring gaps and weaknesses in what protections do exist, if any at all. NCLC advises that state exemption laws should protect a living wage, automatically protect a reasonable amount of money on deposit, preserve the debtors’ ability to work, protect housing and close loopholes, among other provisions.
Customer Service.
The CFPB Complaint Database is a nifty tool that logs the grievances customers file against financial companies and institutions, presenting company- and product-specific trends and individual written complaints. It’s fed by a questionnaire that consumers can file. While not all the information makes it to the public database, it’s all used by the agency. One of the newest sets of these private questions relate to customer service – whether the consumer has contacted a company about the issue and whether they received a response. Some industry insiders are speculating about a new, incoming type of enforcement related to how their businesses do (or don’t) interact with their consumers.
Changing Interchange?
When you swipe your debit or credit card, the merchant kicks up an interchange fee to the card issuer, a racket that generates billions in revenue for some of the largest financial institutions across the country. Illinois is trying to pass a state-level law that would prevent merchants from charging debit interchange fees on taxes and tips (only allowing interchange fees on the original purchase), a move that would reduce fees by an estimated $118 million. But the OCC pushed back in a brief, suggesting that the National Bank Act preempts it.
Said AFR’s Patrick Woodall: “I think the focus is that the incoming administration and Congress is less likely to stand up for the little guy, more likely to stick it to the little guy, and as a consequence, there will be a renewed energy to protect people at the state level.”
Credit Card Rewards.
The CFPB is cracking down on deceptive credit card rewards practices and high-interest credit cards, warning card issuers against federal law violations, such as devaluing rewards, hiding redemption terms, and failing to deliver promised benefits. With 80 percent of all retail credit cards often having APRs above 30 percent and aggressive sales tactics, the CFPB launched Explore Credit Cards, a tool for comparing over 500 cards with unbiased data, to help consumers navigate the credit card rewards ecosystem by promoting transparency and competition to reduce interest and fees.
CAPITAL MARKETS
ESG, DEI, SEC.
First, let’s set the record straight: ESG investing is responsible investing, taking into account Environmental, Social and Governance concerns that affect companies’ finances and shape our future. And DEI initiatives reduce business risk and foster inclusive workplaces.
Over the past few years, Republicans have intensified their assault on both ESG and DEI, deploying state-level legislation, litigation, probes, and advertising campaigns. Companies are beginning to feel greater pressure to scale back policies that resemble responsible ESG or DEI provisions. Just this month, the industry-friendly Fifth Circuit Court of Appeals struck down an attempt by the securities exchange Nasdaq to require its listed companies to set gender and racial targets for their board memberships. Elon Musk and Vivek Ramaswamy, the billionaire oligarchs now heading a government body dedicated to undermining critical regulators, seized upon the chance to attack the agency.
Trying to Confirm SEC Commissioner Crenshaw.
AFR and Public Citizen joined 70 labor, community, consumer, environmental, and public interest organizations to urge the Senate to reconfirm SEC Commissioner Caroline Crenshaw, a qualified and tested leader that would no doubt protect investors. Said AFR’s Lisa Donner:
Workers, retirees, and investors rely on robust regulatory oversight of financial markets for their economic security and it is vitally important to have SEC commissioners committed to standing up for their interests. Commissioner Crenshaw is an able and dedicated public servant and her voice is urgently needed at the commission.
Sadly, Congress is going to adjourn without doing that. A coalition also tried to get the Senate to confirm other regulator nominees, such as positions at OSHA, the CFTC and NLRB.
PRIVATE MARKETS
The Power of Data.
Blackstone is expanding its empire into Georgia with a new data-center expansion in Fayetteville. QTS, Blackstone’s data-center developer for the project, is building a 600-acre complex that will consume one million households worth of electricity. Utility company Georgia Power is planning to construct new power lines across communities and natural landscapes. Residents feel blindsided and worry about losing property to eminent domain, while officials acknowledge a lack of transparency regarding power needs.
Meanwhile, AI giants like Amazon, Microsoft, and Google outbid Bitcoin miners for power, leaving miners to rely on less stable energy sources. And despite promising tax and economic benefits, as AI infrastructure grows, communities — especially property owners — bear the burden of increased infrastructure expansion from rising demands while tech firms profit. The added demand for data center and cryptomining facilities is creating added demand for fossil fueled electricity generation and extraction.
Grocery Growth.
Federal Judge Adrienne Nelson blocked the $25 billion Kroger-Albertsons merger, siding with the FTC and state regulators who pushed concerns that it would create a regional monopoly, raise prices, and lower wages. Following the ruling, Albertsons terminated the deal, sued Kroger for breach of contract, and sought billions in damages. Kroger denied the claims and announced a $7.5 billion share buyback, prioritizing short-term stock boosts and appeasing wealthy shareholders to protect CEO Rodney McMullen’s job, despite his prior promises to lower prices and invest in workers.
But with Trump’s appointment of Andrew Ferguson to lead the FTC, the agency’s priorities may shift. Ferguson, could adopt a more lenient approach to antitrust enforcement, potentially returning to the era of rubber-stamping major mergers.
PE & Healthcare.
Harvard’s School of Public Health says that private equity’s incursion into hospital systems lowers quality care, increases likelihood of patients contracting infections, worsens racial health disparities, and is incompatible with healthcare’s ideal of public interest. Said Professor Alecia McGregor: “As a country, we’ve become desensitized to this notion that health care is the same as any ordinary commodity, and that the provision of health care can be run like any other business…When health care follows the money, we get sicker and sicker.”
A piece in OrthopedicsToday notes that consolidation has increased in that sector from 2019 to 2024.
Other Private Markets News.
Walgreens. The pharmacy-retailer is eying a sale to the private equity firm Sycamore Partners, some years after KKR offered $70 billion to acquire it. Said AFR’s Aliya Sabharwal: “Sycamore’s strategy in the retail sector is typical of private equity’s business model, a large part of which is outright looting its acquired companies.”
Football. Earlier this year, the NFL approved limited private equity buy-in into their teams. Now, private equity firm Ares has scooped up 10 percent of the Dolphins, and the firm Arctos has taken the same stake in the Bills. PE is also interested in college sports.
Piping Hot Stuff. Bain Capital is eying an over-$1 billion deal to acquire Sizzling Platter, a company that operates the franchises of over 750 Little Caesars, Jambas, Wingstops, Dunkin’s, Jersey Mike’ses, Cinnabons, Red Robins and Sizzlers.
CRYPTO
Unstable Coins.
House Majority Leader Rep. Steve Scalise is intent on passing crypto market structure legislation sometime in the first 100 days of the new Congress. The previous digital asset regulatory restructuring bill that passed in the House last year sought to weaken consumer and investor protections, as well as regulatory oversight of financial products and services.
Financial Crisis.
Separate reports from the New York Fed and the Treasury’s Office of Financial Research both warned that crypto-related risks could trigger financial contagion. The NY Fed flagged that crypto investors are tapping into more loans from traditional financial institutions to make riskier bets on digital assets, a level of interconnectedness that could shake financial markets when things go sour. Similarly, the OFR noticed that zip codes with the highest levels of crypto holders saw more households taking out auto and mortgage loans. Said AFR’s Mark Hays: “if more banks are helping people do highly leveraged crypto trading without [regulatory] guardrails, a crash could be a lot bigger…People need to watch out, because what goes up usually comes down.”
Debunking Debanking.
Billionaires, including a16z’s Marc Andreessen, are spinning conspiracy theories about how the Biden administration are supposedly targeted them by pressuring banks to cut ties with crypto companies. The reality is that banking regulators saw several banks and more than a dozen major platforms fail between 2021 and 2023 due to systemic problems in the crypto industry. Those regulators prudently warned banks that exposure to some crypto firms, because of problems with fraud, money laundering and widespread instability, might be incompatible with basic safety and soundness measures that are the baseline for banking regulation.
The Crypto Czar.
Tech investor and co-founder of PayPal, David Sacks has been appointed as Trump’s AI and Crypto Czar. His new role raises potential conflicts of interest due to his investments in AI and crypto startups, including Elon Musk’s xAI. A longtime ally of Peter Thiel and JD Vance, Sacks has a reputation as a key conservative voice in Silicon Valley.
Criminals’ Crypto and the White House.
Howard Lutnick, CEO of Cantor Fitzgerald and Trump’s pick for Secretary of Commerce, has close ties to Tether, the controversial stablecoin widely used by international criminals, including drug cartels, hackers, and spies. Lutnick’s firm invested in Tether and manages part of its reserves, helping boost Tether’s growth to $138 billion in circulation. Despite evidence of Tether's use in money laundering and evading sanctions, Lutnick defends it, dismissing claims of its role in financing terrorism.
SEC Swap.
For most, the collapse of FTX – the crypto exchange whose founder siphoned billions in customer funds, which were virtually wiped out in its bankruptcy, to prop up a sister hedge fund – is a stark reminder that crypto is unstable and rife with bad actors and risky practices. Trump’s pick for SEC chief, Paul Atkin, instead blames… regulators? Atkins, of course, has served as an adviser to several digital-asset firms, including FTX, and he thinks that the country should encourage crypto business and create light-touch regulations for the industry.
Said AFR’s Mark Hays:
Atkins’ wholehearted support of the industry and past record of supporting what we would consider to be deregulatory measures for other parts of the finance industry is troubling…The industry’s broad and systemic record of fraud and mismanagement means that regulators should be keeping a close watch on this sector and ensuring that robust oversight and accountability is the priority.
Circle x Binance.
Circle and Binance, two crypto exchanges that have been in hot water with federal authorities for their questionable practices, have joined forces to “build key relationships across the global finance and commerce landscape.” Binance is still reeling from a $4.3 billion fine and exit from the U.S. market.
Bitcoin Activism.
Microsoft shareholders shot down a proposal requesting the company add Bitcoin to its balance sheet. While it didn’t fly at this corporation, the Motley Fool predicted that this “Bitcoin shareholder activism could pave the way for other companies” to invest in crypto. The article also noted that the resolution was backed by the National Center for Public Policy Research. NCPPR is a think tank created by corporations and wealthy CEOs in the Reagan era to roll back regulatory protections on multiple issues.
HOUSING
Realtors and Conservatives.
The National Association of Realtors: It’s one of the biggest trade associations in the country. It’s been exposed for artificially inflating home prices to net their agents bigger commissions. It’s given corporate landlords outsized power to undermine rent control, just-cause eviction and other pro-tenant measures. And it’s a powerhouse in conservative donations, according to The New York Times. Although its main body gives about 50/50 to Democrats and Republicans, it created a nonprofit called the American Property Owners Alliance five years ago – in its first four years, it gave $10 million to conservative groups. Many of them have nothing to do with housing, instead engaging on right-wing causes.
Fannie/Freddie.
The incoming Trump administration may try to privatize Fannie Mae and Freddie Mac, the government-sponsored mortgage giants that have been in custodianship since the 2008 crisis, which could spell disaster for housing affordability. Because the feds have spent those years improving the enterprises’ financials, it has become easier to chop up the businesses to sell to private investors, according to an analysis by the Congressional Budget Office.
Nonbanks.
Nonbanks can dole out mortgages too, and New York just became one of only a handful of states that wants to treat them to the same regulations as their bankier counterparts. This week, the state Department of Financial Services unveiled a proposal to extend anti-redlining and community reinvestment requirements to nonbank mortgage lenders. Those that originate at least 200 mortgages will have to comply with the rules, which push them to lend to underserved communities.
Unaffordable Rent.
It’s gotten far harder for a record number of people to afford rent, according to Harvard’s Joint Center for Housing Studies. Across all income groups, rental affordability has gone down and a growing portion of household income is going toward rent. For lower-income renters, that means tough financial choices as they have less (or virtually nothing) left over after paying for housing.
Death, Divorce, and Mortgages.
According to the CFPB, when a mortgage borrower passes away or gets a divorce, lenders can often trap their survived-bys and spouses in a “customer service death loop.” Homeowners report that their loan servicers push them to take on new, high-interest loans despite their current mortgage. Others are subjected to months or years of repeated calls requesting documents. In some cases, mortgage companies send private information to their abusers.
CLIMATE and FINANCE
Pensions Burning Out.
When pension boards (knowingly or unknowingly) commit workers’ dollars to funds that invest in fossil fuels, they’re not just harming the climate – they’re harming their own returns in the long term. Ortec Finance warns that North American pension returns could drop up to 50 percent by 2040 under a high warming scenario if climate policy standards don’t change.
Insuring the Future.
Within Our Power, a new report from Insure Our Future Global, questions whether insurers will continue to invest in and underwrite the coal, oil, and gas industries, even as climate-related losses are climbing far beyond what they profit from fossil fuels. Insurance companies lost an estimated $10.6 billion in 2023 to climate losses. They only gained $11.3 billion from underwriting fossil fuel premiums.
Green Loans.
When a homeowner wants to install solar panels, they might take out a residential Property Assessed Clean Energy (rPACE) loan, a type of lending product meant for clean energy upgrades, disaster preparedness, and other home improvement projects. Often hawked by door-to-door salespeople and sketchy contractors, however, they can expose people to predatory and fraudulent sales practices. This week, the CFPB extended existing residential mortgage protections to cover these loans, allowing homeowners to compare financing options and barring lenders from tying people to loans they can’t afford. Said AFREF’s Jessica Garcia:
The CFPB’s rPACE rule sends a valuable signal to lenders: green loan products, including loans to promote residential solar or energy efficiency, must include strong consumer protections like all other financial products. In the coming years, millions more consumers will seek financing for green projects, such as retrofitting homes to be more energy efficient and resilient and to buy green products, like electric vehicles.
Natural Gas.
Delta State Utilities, a platform company created by private equity firm Bernhard Capital Partners, received approval to take over the gas distribution systems of Entergy New Orleans and Entergy Louisiana, in a transaction expected to raise costs for ratepayers. Because of the nature of the arrangement, Bernhard is one step removed from possible financial and legal liability. Said AFREF’s Dustin Duong: “Whatever recourse might need to be taken against Delta in the future, for whatever violation, Bernhard might not be caught in the crossfire.”