A\u00a0Consumer Financial Protection Bureau\u00a0regulation that\u00a0promised\u00a0to save Americans billions of dollars in\u00a0late fees\u00a0on credit cards faces a last-ditch effort to stave off its implementation.<\/p>\n
Led by the\u00a0U.S. Chamber of Commerce, the card industry in March\u00a0sued\u00a0the CFPB in federal court to prevent the new rule from taking effect.<\/p>\n
That effort, which\u00a0bounced\u00a0between venues in Texas and Washington, D.C., for weeks, is now about to reach a milestone: a judge in the Northern District of Texas is expected to announce by Friday evening whether the court will grant the industry\u2019s request for a freeze.<\/p>\n
That could hold up the regulation, which would\u00a0slash\u00a0what most banks can charge in late fees to $8 per incident, just days before it was to\u00a0take effect\u00a0on Tuesday.<\/p>\n
\u201cWe should get some clarity soon about whether the rule is going to be allowed to go into effect,\u201d said\u00a0Tobin Marcus, lead policy analyst at Wolfe Research.<\/p>\n
The credit card regulation is part of President\u00a0Joe Biden\u2019s\u00a0broader election-year war against what he deems\u00a0junk fees.<\/p>\n
Big card issuers have steadily raised the cost of late fees since 2010, profiting off users with low credit scores who\u00a0rack up\u00a0$138 in fees annually per card on average,\u00a0according\u00a0to CFPB Director Rohit Chopra.<\/p>\n
As expected, the industry has mounted a campaign to derail the regulations, deeming them a misguided effort that\u00a0redistributes\u00a0costs to those who pay their bills on time, and ultimately harms those it purports to benefit by making it more likely for users to fall behind.<\/p>\n
Up for grabs is the\u00a0$10 billion\u00a0in fees per year that the CFPB estimates the rule would save American families by pushing down late penalties to $8 from a typical $32 per incident.<\/p>\n
Card issuers including\u00a0Capital One\u00a0and\u00a0Synchrony\u00a0have already talked about efforts to offset the revenue hit they would face if the rule takes effect. They could do so by raising interest rates, adding new fees for things like paper statements, or changing who they choose to lend to.<\/p>\n
Capital One CEO Richard Fairbank said last month that, if implemented, the CFPB rule would impact his bank\u2019s revenue for a \u201ccouple of years\u201d as the company takes \u201cmitigating actions\u201d to raise revenue elsewhere.<\/p>\n
\u201cSome of these mitigating actions have already been implemented and are underway,\u201d Fairbank told analysts during the company\u2019s first-quarter earnings call. \u201cWe are planning on additional actions once we learn more about where the litigation settles out.\u201d<\/p>\n
Like some\u00a0other\u00a0observers, Wolfe Research\u2019s Marcus believes the Chamber of Commerce is likely to prevail in its efforts to hold off the rule, either via the Northern District of Texas or through the 5th Circuit Court of Appeals. If granted, a preliminary injunction could hold up the rule until the dispute is settled, possibly through a lengthy trial.<\/p>\n
The industry group, which includes Washington, D.C.-based trade associations like the American Bankers Association and the Consumer Bankers Association, filed its lawsuit in Texas because it is widely viewed as a friendlier venue for corporations, Marcus said.<\/p>\n
\u201cI would be very surprised if [Texas Judge Mark T.] Pittman denies that injunction on the merits,\u201d he said. \u201cOne way or another, I think implementation is going to be blocked before the rule is supposed to go into effect.\u201d<\/p>\n
The CFPB declined to comment, and the Chamber of Commerce didn\u2019t immediately respond to a request for comment.<\/p>\n<\/p>\n
A\u00a0Consumer Financial Protection Bureau\u00a0regulation that\u00a0promised\u00a0to save Americans billions of dollars in\u00a0late fees\u00a0on credit cards faces a last-ditch effort to stave off its implementation. Led by the\u00a0U.S. Chamber of Commerce, the card industry in March\u00a0sued\u00a0the CFPB in federal court to prevent the new rule from taking effect. That effort, which\u00a0bounced\u00a0between venues in Texas and Washington, D.C., […]<\/p>\n","protected":false},"author":0,"featured_media":4191,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-4190","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business"],"_links":{"self":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts\/4190","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/comments?post=4190"}],"version-history":[{"count":0,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts\/4190\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/media\/4191"}],"wp:attachment":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/media?parent=4190"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/categories?post=4190"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/tags?post=4190"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}