Chamber, banking groups blast new Biden ‘junk fee’ fight
The U.S. Chamber of Commerce and several banking groups blasted President Biden’s latest moves in the fight against “junk fees.”
Biden announced Tuesday a new “strike force” to coordinate cross-agency efforts to crack down on price-gouging. The announcement comes ahead of the State of the Union address on Thursday, in which Biden is expected to tout his commitment to lowering prices for American consumers as his reelection campaign heats up.
The Chamber criticized the strike force, which will be co-chaired by the Department of Justice and the Federal Trade Commission (FTC), as a return to government price control.
“This effort by the Biden Administration to use regulatory agencies to micromanage how private businesses set prices will have the same result: shortages, fewer choices for consumers, a weaker economy, and less jobs,” said Neil Bradley, executive vice president, chief policy officer and head of strategic advocacy at the U.S. Chamber of Commerce.
“To make matters worse, the strike force will be led by two agencies that, for the past three years, have been openly hostile to market efficiencies — blatantly ignoring lower prices and better outcomes for consumers,” Bradley said.
Bradley also said the Chamber will be filing a lawsuit to block a Consumer Financial Protection Bureau (CFPB) rule finalized Tuesday that will cap credit card late fees at $8 for large issuers.
Consumer Bankers Association (CBA) President and CEO Lindsey Johnson said the CFPB has “skipped important legal requirements in its haste to finalize the rulemaking,” and argued while the rule would benefit a small subset of late payers, all cardholders would shoulder the burden in the form of higher credit card interest rates and lower credit availability.
Rob Nichols, president and CEO of the American Bankers Association, called the rule “flawed” and accused the agency of “clearly choosing to put politics over sound public policy” ahead of the State of the Union.
“The Bureau’s misguided decision to cap credit card late fees at a level far below banks’ actual costs will force card issuers to reduce credit lines, tighten standards for new accounts and raise APRs for all consumers — even those who pay on time,” Nichols said.
But CFPB Director Rohit Chopra accused credit card companies of “exploiting a loophole to harvest billions of dollars in junk fees from American consumers.”
The CFPB has estimated capping late fees that large credit card issuers can charge would save Americans $10 billion per year, with an average savings of $220 per person.
“Today’s rule ends the era of big credit card companies hiding behind the excuse of inflation when they hike fees on borrowers and boost their own bottom lines,” Chopra said.
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