The Chairmen of the House and Senate committees with jurisdiction over banking issues have introduced Congressional Review Act resolutions to nullify the CFPB’s overdraft rule.

House Financial Services Committee Chairman Rep. French Hill, R-Ark., introduced H.J. Res 59 and Senate Banking Committee Chairman Sen. Tim Scott, R-S.C. introduced S.J Res 18 to void the rule.

The overdraft rule was originally scheduled to go into effect on Oct. 1. However, it seems clear that the rule will be reviewed by the new leadership at the CFPB. In litigation over the rule there is a CFPB motion pending that, if granted, would formally delay the effective date until Dec. 30 in order to provide ample time for that review. .

If allowed to go into effect as issued, the rule would limit overdraft fees to $5 at financial institutions with more than $10 billion in assets, unless they set a cap that covers their actual costs or they treat the payment of an overdraft as a loan and give appropriate disclosures under the Truth in Lending Act and Regulation Z.

Scott and Hill said many people rely on overdraft programs when they are short of cash and he blamed the Biden Administration, which issued the rule, for seeking political headlines over sound policies.

“The overdraft rule was yet another example – many consumers rely on overdraft services to make ends meet and limiting this practice will push Americans to riskier financial products,” Scott said.

Hill agreed. “The CFPB’s actions on overdraft is another form of government price controls that hurt consumers who deserve financial protections and greater choice,” he said.

The nullification effort is supported by banking trade groups.

However a critic of the effort said that a larger overdraft fee would threaten to exhaust scarce funds for families.

 “A vote against the overdraft rule is a decision to prioritize Wall Street’s profits above the needs of people living paycheck to paycheck,” said Adam Rust, director of financial services at the Consumer Federation of America.

He added, “Instead of making life better for big banks, our elected officials should pursue an agenda serving the needs of everyday Americans.”