Biden calls for crackdown on ‘junk’ fees in State of the Union address
WASHINGTON — Despite loud jeers from Republicans on several occasions, President Joe Biden emphasized his administration’s work on “junk fees” and highlighted what he said is a rebounding economy in Tuesday night’s State of the Union address, widely seen as the opening salvo of his 2024 reelection bid.
Biden touted the work his administration has done to address what he called “junk” fees, and urged Congress to pass the “Junk Fee Prevention Act.” The Consumer Financial Protection Bureau last week proposed a rule that would drop credit card fees to $8 from $30, threatening $9 billion a year in fees for banks and credit card companies.
“Junk fees may not matter to the very wealthy, but they matter to most folks in homes like the one I grew up in,” he said. “They add up to hundreds of dollars a month. They make it harder for you to pay the bills or afford that family trip. I know how unfair it feels when a company overcharges you and gets away with it.”
He also said that his administration has “reduced exorbitant bank overdraft fees,” which he said amounted to more than $1 billion a year.
Biden’s support of the CFPB and its director Rohit Chopra has been a consistent theme throughout his administration, even as the agency’s funding comes under scrutiny by federal courts and by Republicans in Congress. The nod to the agency during the State of the Union speech redoubles the Biden administration’s focus on these fees as its political focus in the financial policy realm.
Banking trade groups are pushing back against the CFPB’s plan, however, arguing that reduced late fees will necessitate increased prices for everyone else.
“The CFPB’s claim that the rulemaking will reduce late fees from $12B a year to $3B fails to take into account the costs imposed on the roughly 70% of credit card holders who pay on time each month,” the American Bankers Association ahead of Biden’s speech. “They will see their costs go up. In addition, reducing the late fee will only encourage more people to pay late, which will harm their credit score and only damage their ability to access credit.”
The Independent Community Bankers Association called Biden’s remarks “misleading.”
“ICBA and the nation’s community banks continue to reject President Biden’s mischaracterization of overdraft protection services and credit card fees for late payments as ‘junk fees,'” said ICBA President and CEO Rebeca Romero Rainey in a statement. “Such language misrepresents the overdraft protection services that banks offer their customers and how community banks meet the credit card needs of their customers.”
The Consumer Bankers Association said comparing banking industry consumer fees to other fees like resort or cable internet charges is inaccurate.
“Continuing to conflate fees charged by banks to extend credit to consumers, with those in other sectors of the economy, fails to recognize the fact that banks operate in the most competitive, well-regulated industry in the world and are required by law to provide clear disclosures aimed at empowering consumers to make informed financial decisions,” said Consumer Bankers Association President and CEO Lindsey Johnson in a statement.
Aside from junk fees, Biden struck a strong antitrust tone in his speech, and he promoted stronger anti-fraud measures around the federal spending meant for small businesses and individuals and distributed by financial firms. Antitrust policy could show up in developing policies around bank mergers, and that COVID-19 era federal spending refers, at least in part, to fraud around the Paycheck Protection Program.
“Before I came to office many inspector generals who protect taxpayer dollars were sidelined. Fraud was rampant,” Biden said. “Last year, I told you the watchdogs are back. Since then, we’ve recovered billions of taxpayer dollars.”
He also repeated pleas to increase taxes on billionaires, profitable companies and corporate stock buybacks.
For more updates check below links and stay updated with News AKMI.
Life and Style || Lifetime Fitness || Automotive News || Tech News || Giant Bikes || Cool Cars || Food and Drinks