I knew that we only had about $11 in our account, and I had to make sure
that we had enough food to get us through.
I spent about $9 in three different transactions.
Something went through our account that we had forgotten about, and so our
account was already an overdraft.
We were charged $30 each overdraft.
We didn't have much money to begin with in the account, and I was being so careful.
And yet we got socked with almost $100 in overdraft fees.
House Republicans are absolutely ripping the Biden administration
for their plan to protect Americans from greedy banks looking to profit
by charging exorbitant overdraft fees.
Now, the move is also pissing off banks, who happen to be the top donors
for the very politicians crying out about these proposals.
Now, this is sure to spark a massive fight between the white House and
financial giants, and I'd love to see it.
This is one of the rare areas where I think the Biden administration
deserves a lot of credit.
So let's talk about their proposal and what this could do
to actually make your life better.
As you bank with some of these big banks across the country.
Under the new draft rules unveiled by the Consumer Financial Protection Bureau,
my favorite government agency, banks would be subject
to tough credit card like regulations on their overdraft programs unless they
agree to lower fees on customers.
The charges would be capped either to the amount necessary for a bank to recover
its losses or to a federal maximum,
which may be set between $3 and $14.
Now, if you're unfamiliar with overdraft fees,
I don't know how you could be as an adult.
I feel like every adult in this country has suffered from an overdraft fee
at least once, but it is worth getting into how they work
to really understand how unjust they are.
So basically, if a consumer spends more money than they have, if they use
their checking account to buy something, and let's say they've got $10 left
in their checking account and they buy something that's $10 and 15 $0.15.
Well, that $0.15 means that they have charged more
than what they have in their funds.
And so the bank will tack on an overdraft fee in some cases as high as 35 bucks.
Now, think about how unjust that is, right?
When you think about the easy access to cheap credit that Americans have had
for such a long time, the idea that they should, you know, see this as like, oh,
it's kind of like a credit card, right?
You have fees just like a credit card. No, this is actually totally different.
And it's far more exorbitant.
It's far more expensive than simply buying items on a credit card.
Now, the fees historically have fallen the hardest on poor Americans
while enriching major banks.
The fees are predatory in a lot of cases.
The Cfpb, the Consumer Financial Protection Bureau, says that the fees
can be as much as $35, even though the average debit card overdrafts by consumers
are actually less than $26.
So you kind of see the uneven nature and the unfairness of these fees.
So this has been a problem for so long that TYT has covered it many, many times.
In fact, here's a video from 12 freaking years ago when TYT covered it.
Let's watch.
Every time that you went over your account and you didn't even know about it,
you'd get charged like $35.
So let's say you went over because your rent was too much, and then you bought
a cup of coffee for $2. Then you went to McDonald's and had a $7 meal, $35 for
your original overdraft, $35 for your cup of coffee, $35 for the McDonald's meal.
Every one of those added up.
It is even more outrageous than what you what you laid out.
So let's say, you had $50 in your bank account left and then you made a charge
for on one day you may charge for $1, $2,
$3, $4, $2, $4, $6, and then one for $75.
Right?
If the way they make those transactions happen is based on on time,
it would be kind of fair.
But here's what they do.
They take all the transactions from that day.
Then they they clear the most expensive transaction.
So you're instantly overdrafted.
And then each subsequent transaction for $1, $2, $4. Those are all overdrafts too,
which is so unfair because if you just did it by chronological order,
half of those wouldn't be overdrafts because you had the money.
I mean, it's just so absolutely sick, right?
They would reorder the transactions to ensure that the more expensive
transactions cleared earlier.
That way subsequent transactions would increase the number
of overdraft fees that are implemented in your account by the bank.
And this really did harm a lot of Americans and ended up being
a major profitable element of the business model for these banks.
So, for instance, in 2022, overdraft charges generated nearly $9
billion in revenue for the industry.
And that's according to data furnished this week by the Consumer Financial
Protection Bureau, which has repeatedly punished banks for imposing excessive
penalties to boost their profits.
And look, there has been some action already taken against banks
for implementing these overdraft fees in ways that are just,
believe it or not, even shadier than what you've just learned about.
For instance, as part of a roughly $4 billion settlement with Wells Fargo
in 2022, the bureau found the company's overdraft practices to be illegal,
alleging that the bank charged customers even in cases when customers
had enough money in their accounts.
The Treasury Department, meanwhile, fined Bank of America last July
for imposing overdraft fees multiple times on a single transaction, and top
Cfpb officials say the regulations, which would only apply to the largest
banks, can still save consumers about $3.5 billion annually in fees.
So that is what the Biden administration or I should say,
the Consumer Financial Protection Bureau under the Biden administration
is trying to do for the American people.
They're trying to save you $3.5 billion annually
in these, like, junk overdraft fees.
But big banks are big mad.
Some industry lobbyists are expecting to sue the agency if they issue any
final rules, potentially denying relief to Americans who have clamored for
the Consumer Financial Protection Bureau to finally do something about this.
And in an effort to avoid federal government, the federal government
from regulating the fees, some of the banks have already taken some actions.
So I think that this is a good case study proving how just the mere threat
of the government working on behalf of the American people
will lead to corporations, banks, companies preemptively making changes
because they don't want the regulation.
So, for instance, Bank of America reduced the amount of its fees
from $35 to $10, which is great.
Wells Fargo similarly overhauled its policies in 2022,
probably after they, you know, lost, that investigation by the feds.
They joined some banks in instituting a grace period
in which a customer can make their account whole before any fee is incurred.
And then there are some other banks, like Capital One, for instance,
that have decided, you know what?
We're just going to eliminate overdraft fees entirely, providing provided that
the customers that we're working with are making regular deposits in their account.
So like you'll see this with a lot of bank accounts, right.
We won't charge you any fees. No monthly fees.
No yearly fees if you do a direct deposit into this account.
Now, even though Americans who could use the money
have access to way cheaper credit than.
Like what these overdraft fees end up charging, a pair of House Republicans
are basically regurgitating the very talking points coming
from lobbyists representing these banks.
And those, GOP lawmakers include Patrick McHenry from North Carolina
and Andy Barr from Kentucky.
They claim that this proposal would only harm consumers in the long run,
because consumers really like their lives are enriched by junk fees,
according to these guys.
Here's what they argue.
The Biden administration's attempts to mandate one size fits all
consumer financial products and services diminish financial inclusion.
Or we're using the language of inclusion to to to defend these acts
by these banks, okay.
Limit consumer choice, stifle innovation.
How is it innovative to charge ridiculous junk fees?
How is that innovative?
But anyway, let me continue and ultimately raise the cost
of banking for all consumers.
It's just, again, more of the same boring talking points.
And I it's important for you guys to know this because as certain, a certain faction
of the GOP has kind of co-opted economic populist rhetoric to fool
their constituents, it really must be said that these are people who do not care
about your financial stability.
They don't care about how predatory practices by banks or corporations
negatively impact your life and your finances.
They also went on to say this proposed rule will further reduce access
to the short terme liquidity products that millions of Americans rely on
to help make ends meet.
We urge the Cfpb to withdraw this misguided proposal
that harms the very consumers the agency was created to protect.
I don't say this lightly. This is absolutely true.
The Consumer Financial Protection Bureau, at this point, is literally the only
government agency that consistently gets Americans their money back when they've
been defrauded, when they've been scammed.
We also, luckily, now have fantastic leadership
in the Federal Trade Commission.
Lina Khan is doing a great job ensuring that antitrust laws aren't being broken by
corporations, that some of these mergers that would give you less options,
less choices, do not come to fruition.
And that's also something that the GOP seems to be super salty about.
So while on one hand they claim that they want to protect your options, make no
mistake about it, what you see among the corporatist wing of both parties, to be
quite frank, is this effort to maintain a system in which corporations monopolize
corporations give you less options, and I'm really happy to see that the Cfpb and
the Federal Trade Commission is working hard, to basically dismantle all of that.
So good news coming out of the Biden administration.
I'd like to give myself a pat on the back for being very fair because while again,
I'm very critical of Biden, this is something that he and his
administration deserve some credit for.
Thanks for watching.
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