Senators call on JP Morgan Chase to answer to threatened overdraft fees

Two United States senators denounced a threat by JPMorgan Chase & Co. to impose new checking account fees for over 80 million consumers in response to the Consumer Financial Protection Bureau’s (CFPB’s) rule to cap overdraft fees.

“JPMorgan Chase’s potential imposition of new costs on its customers in response to legal and long-overdue efforts to limit abusive fees — at a time when the then bank is making record profits and funneling those profits straight into the pockets of its executives — is outrageous,” the senators wrote in an Aug. 8 letter sent to JPMorgan Chase President and CEO Jamie Dimon. “JPMorgan Chase should put a hold on any plans to levy additional charges on working Americans.”

U.S. Sens. Elizabeth Warren (D-MA) and Chris Van Hollen (D-MD) wrote that overdraft fees are one of the most common exploitative mechanisms big banks use to target the poor, noting that the CFPB has determined that these fees harm the most vulnerable consumers, with 9 percent of consumers paying nearly 80 percent of all combined overdraft and non-sufficient fund fees.

Due to the “overwhelming evidence” revealing banks’ abuse of overdraft fees, the CFPB in January proposed a rule to rein in excessive fees by closing an outdated loophole that has allowed the largest banks to transform overdrafts into a massive junk fee harvesting machine, according to their letter.

This rule, they wrote, would require very large financial institutions to treat overdraft loans like credit cards and other loans, and the charges would be capped, either to the amount necessary for a bank to cover its losses or to a level no higher than a federal benchmark.

“JPMorgan Chase is the industry leader when it comes to usurious overdraft fees, collecting $1.1 billion in overdraft revenue last year alone,” the senators wrote. “Major banks like JPMorgan Chase use these overdraft fees that disproportionately hurt low-income Americans to inflate their already substantial earnings: 2023 was JPMorgan Chase’s most profitable year in history, raking in $49.6 billion, setting a new record for the American banking industry.”

They also pointed out that the bank has started funneling $30 billion to its wealthy investors through a massive stock buyback program.

“This recent cash bleed is the cherry on top of its recent history of $2 billion in buybacks per quarter,” wrote the lawmakers. “There is no justification whatsoever for imposing new fees on working families when your bank is hugely profitable.”

Sen. Warren and Sen. Van Hollen asked Dimon to answer several questions by Aug. 28, including how much the bank estimates it would collect under the new CFPB rule and what specific new fees the bank has considered imposing on customers if the CFPB rule is finalized.

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