Disapproving the Rule Submitted By the Bureau of Consumer Financial Protection Relating to ``Overdraft Lending: Very Large Financial Institutions''

Floor Speech

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Mr. BARR. Mr. Speaker, I thank my friend, Chairman Hill, for bringing this important resolution of disapproval to the House floor, nullifying the Consumer Financial Protection Bureau's disastrous overdraft rule.

Let me set the record straight, Mr. Speaker. This resolution of disapproval doesn't increase fees, as my friends on the other side of the aisle insinuate. In fact, what it does do is it invalidates a regulation that will take this critical lifeline away from many of my constituents.

Indeed, for many families across this country, living paycheck to paycheck, overdraft services are a critical safety net. Without this service, necessities would become harder to obtain. Overdraft services are not a luxury. They are a lifeline. For my friends on the other side of the aisle to use incendiary language like ``shameful,'' I submit what is shameful is to take away this lifeline from our constituents.

Consumers understand the costs associated with overdraft services, and they willingly opt in because they find value in the protection that it offers. They are not coerced. They make an informed decision, knowing that a small, predictable fee prevents far more severe consequences like a bounced check or late fees.

It is a convenience that allows consumers to avoid the embarrassment of being turned down at the point of sale. Unfortunately, my Democrat colleagues refuse to recognize this basic truth, choosing instead to label overdraft products as predatory.

Let me reiterate that point, Mr. Speaker. Consumers choose to use this service, and they opt into the service voluntarily.

The first option under the new rule forces financial institutions to treat overdrafts as extensions of credit. This change would severely limit access to the product, especially for those who need it most. Financial institutions would have to underwrite each overdraft transaction, evaluating a borrower's ability to pay a relatively small amount. This would be both impractical and inefficient.

The alternative proposed by the Bureau, a safe harbor charge cap of $5, would force many banks to exit this product altogether. Credit unions would also discontinue this service. This would price out the very consumers who rely on overdrafts the most.

They use the word ``predatory.'' Mr. Speaker, let me tell you what is predatory. What is predatory is taking away this product from the American people and pushing them into actual nonbank predatory lenders and usurious products.

As was mentioned earlier, the Federal Reserve Bank of New York has already concluded that overdraft fee caps hamper, rather than foster, financial inclusion. The consequences of the rule have been studied, and it is evident that this cap would harm consumers by limiting their access to necessary financial services.

Finally, this idea that smaller banks and credit unions are unaffected by the rule is simply wrong. While institutions with less than $10 billion in assets are purportedly excluded from the rule, they will still be forced to deal with this cap just to stay competitive.

The truth is it is the big banks they are protecting. The big Wall Street banks can afford to go without these fees. It is the community banks in our neighborhoods and in our communities who can't afford to provide this product without the fees.

Mr. Speaker, just in conclusion, this is a real-life testimonial about the value of these overdraft protections from a community bank in my district:

We have a customer with two children and a husband in the military. As you know, things can be difficult when one parent is deployed and one parent is alone with children, trying to manage finances, school, after-school activities, and church.

As the customer said, things can be overwhelming, even exclusive of her husband's deployment. This customer approached me in church with her head down, saying that she was having a tough time with things. Some expenses surprised her, and she was suddenly out of money for the month. She was okay, as she had groceries, gas, and her bills paid, until she got a flat tire on the way to a school function. She got the car to the tire shop.

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Mr. BARR. Mr. Speaker, I will finish the story.

The tire was irreparable. She had to buy a new tire for a couple of hundred dollars she didn't have. She was not able to keep up with her car. She had to buy the new tire. There was no choice.

She ran her debit card, and it covered the tire. The family went home. She checked her account when she got home, wondering how it was paid for, when she didn't have the money in it. It was her overdraft that covered it. She thanked me that her community bank was there for her to cover her overdraft so she could keep moving without having to call for help.

Mr. Speaker, needless to say, the banker was tremendously humbled that she was able to help this mother out due to the overdraft. They are there in time of need.

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