Staff Reports
The Biden administration’s so-called “Consumer Financial Protection Bureau” is at it again, sticking its nose where it doesn’t belong. They announced a new rule to force most banks to cap credit card late fees at a measly $8. Can you believe that? The CFPB claims they’re closing a “loophole exploited by large credit card issuers.” But really, this is just another power grab by the government to control how businesses operate.
According to the CFPB, these fees cost consumers $14 billion per year. They claim that this new rule will save consumers an estimated $10 billion annually. But who’s to say these so-called “savings” won’t just be passed on to consumers in other sneaky ways? It’s just a classic case of the government thinking they know better than the free market.
Biden administration unveils new rule to cap credit card late fees at $8. https://t.co/y3qxdhhavD
— Sheena Anne Kadi (@Sheena_Kadi) March 5, 2024
But it gets even worse. The new rule would not only cap all credit card late fees at $8, but it would also no longer index that total to inflation. The Biden administration says this move will result in average savings of $220 annually for over 45 million consumers. But isn’t it possible that this could have unintended consequences for those who rely on credit card programs?
The Consumer Bankers Association President and CEO, Lindsey Johnson, blasted this new rule, and for good reason. She argues that the rule will actually end up helping only a small minority of consumers who face late fees, while increasing costs among the overwhelming majority of cardholders who pay their bills on time. It’s just not fair to punish responsible consumers for the mistakes of a few.
And it’s not just the banking industry speaking out against this overreach. Even Senate Banking Committee ranking member Tim Scott cautioned that while this may sound like a good idea in theory, it could actually reduce the availability of credit card programs for those in need. After all, lawful and contractual payment incentives promote financial discipline and responsibility. Why should the government interfere with that?
It’s clear that the Biden administration is using the CFPB to push its own political agenda. House Financial Services Committee Chairman, Patrick McHenry, accused the Biden administration of “weaponizing” financial regulators to play politics in an election year. It’s just another example of big government overstepping its bounds.
This latest rule is just one in a series of power grabs by the Biden CFPB. Last year, they announced guidance to stop large banks from charging “excessive” or “junk” fees for providing basic customer service. The government needs to stop meddling in private businesses and let the free market do its job. Otherwise, we’ll all be feeling the consequences of their overreach.
