Acting CFPB Director Bessent Halts $5 Overdraft Cap, Casting Doubt On Future Of CFPB Rules

 By Ray Birch

WASHINGTON—Is the $5 cap on overdraft fees dead?

Scott Bessent, Treasury Secretary and current acting director of the Consumer Financial Protection Bureau, has mandated a suspension of a wide range of activities at the agency. And among those activities halted is the imposing of the $5 OD cap for financial institutions over $10 billion in assets, POLITICO reported.

In an email to agency staff on Monday, which was obtained by POLITICO, Bessent instructed CFPB personnel to cease all rulemaking activities and suspend the effective dates of any rules that had not yet taken effect. He further directed employees to stop all activities related to enforcement actions, litigation, and public communications.

As CUToday.info reported, the CFPB late last year issued a final rule on overdrafts analysts forecast will likely drive many financial institutions over $10 billion in assets to drop their OD charge to a miniscule $5, and then eventually force all other FIs to drop their price to five bucks due to competitive pressure.

The overdraft final rule was slated to take effect on Oct.1, 2025.

Scott Bessent

The move by Bessent does not immediately repeal the CFPB’s overdraft rules, pointed out J.V. Proesel, president of Moebs $ervices.

“However, Bessent’s appointment and actions today signal the expectation to reverse the flurry of rules and actions issued under director Chopra in the final months of the Biden Administration,” Proesel told CUToday.info. “As such, it is highly unlikely Chopra’s OD rules will see the light of day.”

Sen. Tim Scott (R-S.C.) chair of the Senate Banking Committee, and French Hill (R-AR), chair of the House Financial Services Committee, have signaled they will target the overdraft rules through the Congressional Review Act (CRA).

Simple Majority Vote

“The CRA requires only a simple majority vote and the President’s approval. There is a strong likelihood the final overdraft rules will die by CRA,” Proesel said.

Along with the overdraft rules, there are four other Chopra-era rules issued by the CFPB in the closing days of December being targeted for CRA repeal: the open banking rule, medical debt and credit reports, and nonbank digital payment app rules, Proesel explained.  

J.V. Proesel

According to Proesel, in addition to the Congressional Review Act, there are few other options for the Trump Administration to halt the overdraft rules:

• “The OD Rules are currently being challenged in district court. The CFPB under Bessent will likely not defend or pursue any further legal challenges if the overdraft rules are overturned,” Proesel said.
• “The CFPB could repeal the overdraft rules, but this would take more time and effort since the repeal would be subject to normal rulemaking process and comment period. If necessary, the CFPB will repeal the rules, it is just not the first option since it would be difficult to do before the final rules take effect later this year,” Proesel said.
• “There will be more legal filings in the coming weeks to challenge the constitutionality of the CFPB, as some experts have pointed out the agency has been operating illegally based on its funding sources. By congressional mandate, the Federal Reserve funds the CFPB through its earnings, but the Fed has no earnings, operating at a loss, for the last two years. If successful, the CFPB could be ruled unconstitutional and all rules since null and void,” Proesel said.

Lastly, the Trump Administration may try to close the CFPB through executive order.

“The administration is actively looking to do the same with other agencies. This most certainly would also be challenged, but President Trump, with support from the Department of Government Efficiency, could choose to do so,” Proesel said.

Ultimately, the permanent elimination of the CFPB would have to happen by Congressional legislation. The biggest hurdle for this outcome is a Senate filibuster, which would require 60 votes to overcome, Proesel noted.

“President Trump’s firing of Chopra and appointment of Bessent as acting director brings us one step closer to making sure the overdraft rules do not take effect in October 2025. The CFPB weathervane has shifted,” Proesel said. “The excessive enforcement headwinds and cumbersome rules have reversed. Both credit unions and banks can expect smooth sailing to focus on serving their members and customers once again.”