Banks Slam Overdraft Limits as Violation of CFPB’s Own Statute

Banks are sounding the alarm that the Consumer Financial Protection Bureau will contravene its own founding statute if it limits how much they can charge when customers overdraw their accounts.

Their complaints, raised in comments to the agency that closed this week, center on how the CFPB wants to define overdraft accounts in its proposed rule, which is part of the Biden administration’s broader effort to fight so-called “junk fees,” or costs hidden from customers.

The rule would let banks treat the overdraft as a loan to customers that charges interest. But the 2010 Dodd-Frank Act, which created the ...