Sen. Elizabeth Warren pushes CEOs of three major banks to kill overdraft fees
Massachusetts Democratic Sen. Elizabeth Warren has called Jamie Dimon the “star of the overdraft show” because of the billions of dollars JPMorgan Chase & Co. has made from those banking fees. Now she’s telling Dimon and two of his fellow Wall Street chief executives to stop.
The senator sent letters Wednesday to Dimon, Wells Fargo & Co.’s Charlie Scharf and Bank of America Corp.’s Brian Moynihan, pushing them to follow the lead of some rivals and get rid of all fees for overdrafts. The letter was also signed by two other Democrats, Sen. Cory Booker of New Jersey and Rep. Carolyn Maloney of New York.
“Capital One and Citigroup Inc. moved to eliminate these predatory fees,” Warren wrote, according to copies of the letter seen by Bloomberg News. “It is now time for the industry as a whole, and in particular, the major institutions raking in these fees, to follow suit and protect consumers.”
Earlier this year, Citigroup became the first of the biggest U.S. banks to say it would ditch the charges as politicians, attorneys general and consumer advocates criticize them for hurting low-income consumers. Bank of America and Wells have said they’ll stop nonsufficient fund fees and at least ease off on overdraft charges, either reducing fees or giving daylong grace periods. JPMorgan in December said it had helped 2 million customers avoid the costs.
In a letter to Booker and four other senators in March, JPMorgan touted those changes while saying overdrafts were a matter of customer choice.
“At Chase, we know our customers want options,” the New York-based bank said in its letter. “We offer accounts that allow them to ‘go overdrawn’ (often without charging them for it) to complete a requested payment, as well as accounts that do not offer overdraft services and, therefore, do not incur overdraft fee.”
JPMorgan and Bank of America declined to comment on the lawmakers’ letter, and Wells Fargo had no immediate comment.
Overdraft protection can be an expensive convenience
The Consumer Financial Protection Bureau found in December that 9% of consumers pay 10 or more overdraft fees a year, accounting for about 80% of that revenue for banks. The three banks Warren wrote to — JPMorgan, Bank of America and Wells Fargo — made a combined $3.76 billion in overdraft fees last year alone, in an industry where revenue from overdraft and nonsufficient funds fees totaled more than $15 billion in 2019, according to the report.
Overdraft fee revenue dropped during the COVID-19 pandemic, as government stimulus checks helped prop up consumers’ bank accounts and widespread lockdowns cut into spending.
Warren’s letter, which continues a battle she’s been fighting for years, asked the banks to get back to her by mid-May with answers about how much they’ve charged customers on overdraft fees since making their changes, and what kind of limits they have in place.
“In recent months, as several major financial institutions moved to eliminate or reduce overdraft fees, there has been a ‘race-to-the-top’ in establishing more pro-consumer fee policies,” she wrote. “But not all banks fully participated.”
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