CFPB rules may face freeze | Wilnesh News

A Consumer Financial Protection Bureau Regulation promised A bill that would save Americans billions in late credit card fees faces a last-ditch effort to block its implementation.

The leader is american chamber of commerce3. Card industry in March be accused The CFPB filed suit in federal court to block the new rule from taking effect.

That effort, Rebound A weeks-long dispute between venues in Texas and Washington, D.C., is now approaching a milestone: A judge in the Northern District of Texas is expected to announce Friday night whether the court will approve a freeze for the industry ask.

That could hamper implementation of the rule that would slash the late fees most banks charge to $8 per incident, just days after Take effect Tuesday.

“We should find out as soon as possible whether the rule will be allowed to go into effect,” said Tobin MarcusChief Policy Analyst at Wolff Research.

Credit card regulation is part of President Joe Biden’s broader election-year war against what he considers junk fees.

Since 2010, large card issuers have steadily raised late fee costs to profit from users with lower credit scores, who charge an average of $138 per card per year in fees. according to CFPB Director Rohit Chopra.

As expected, the industry launched a campaign to undermine the regulations, arguing that they were a misguided effort to reallocate Those who pay their bills on time incur costs, ultimately hurting those who claim to benefit by making users more likely to fall behind.

Up for grabs is $10 billion The CFPB estimates that the rule will save American families money by reducing overdue fines from the typical $32 per incident to $8.

Card issuers include capital one and synchronicity has talked about efforts to offset the revenue losses they will face if the rule comes into effect. They can do this by raising interest rates, adding new fees for things like paper statements, or changing the loans they choose.

Capital One CEO Richard Fairbank said last month that if implemented, the Consumer Financial Protection Bureau’s rules would impact the bank’s revenue for “several years” as the company takes “mitigation measures.” to increase revenue elsewhere.

“Some of these mitigation actions have already been implemented and are ongoing,” Fairbank told analysts on the company’s first-quarter earnings call. “We plan to take additional actions once we know more about the outcome of the litigation.”

like some other Wolfe Research’s Marcus believes the chamber’s efforts to delay the rule through the Northern District of Texas or the Fifth Circuit Court of Appeals are likely to prevail. If granted, a preliminary injunction could maintain the rule until the dispute is resolved, possibly through a lengthy trial.

Marcus said the industry group, which includes Washington, D.C.-based trade associations such as the American Bankers Association and the Consumer Bankers Association, filed the lawsuit in Texas because it is widely seen as a friendlier place for business. place.

“I would be very surprised if (Texas Judge Mark T.) Pittman denies the injunction on the merits,” he said. “Regardless, I think implementation will be hampered until the rule comes into effect.”

The CFPB declined to comment, and the chamber did not immediately respond to a request for comment.