A Consumer Financial Protection Bureau Regulation promised Save Americans Billions of Dollars Overdue penalty Credit cards face last-ditch efforts 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.
This may hinder the implementation of the regulation, which will reduce Most banks can charge late fees of up to $8 per event, just days before the event occurs Take effect Tuesday.
“We should find out as soon as possible whether this rule will be allowed to take effect,” said Tobin MarcusChief Policy Analyst at Wolff Research.
Credit card regulation is part of the presidency Joe Biden’s against what he sees as a broader election-year war. trash fee.
Since 2010, large card issuers have steadily increased the cost of late fees to profit from users with lower credit scores. set up The average annual fee per card is $138. according to CFPB Director Rohit Chopra.
New fees, higher rates
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 such as paper bills, or changing loan recipients.
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.”
Early trial?
like some other Wolfe Research’s Marcus believes the chamber’s efforts to delay the rule through the Northern District of Texas or 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 American Bankers Association and Consumer Bankers Association, filed suit in Texas because it is widely considered a friendlier place for business. place.
“I would be very surprised if (Texas Judge Mark T.) Pittman denies the injunction on its merits,” he says. “That aside though, I think implementation will be slowed up before it begins.”
The CFPB declined to comment, and did not immediately respond to a request for comment by chamber.
