Independent Banker - February 2023 - 26

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fees that are charged to customers.
In March 2022, the CFPB noted in
its blog that " overdraft fees can price
people out of banking. "
The overdraft fee circular's effects
Of late, the CFPB has been taking
regulatory actions using novel tools
including interpretive rules, advisory
opinions and circulars, rather than
formal rule changes. The circular is an
example of this less-formal approach.
" The substance of the circular
and also the manner in which it was
established are of concern, " says
Mickey Marshall, ICBA AVP and
regulatory counsel. " ICBA believes this
change should have been done through
the rulemaking process. The circular
was unanticipated by the industry,
and the public and the industry
didn't get the opportunity to provide
feedback or to consider its impact
prior to implementation. The process
did not promote transparency or give
banks the opportunity to comment
or explain their position prior to
implementation. "
How the circular will affect
community banks is not entirely clear.
" The CFPB exercises direct supervision
and examinations for banks with
total assets over $10 billion, whereas
most community banks are directly
supervised by the FDIC, Federal
Reserve or OCC, " Marshall says.
" While the CFPB circular may not be
technically binding on the other federal
bank regulators, community banks
need to consider that the publication
and promotion of the circular is not
happening in a vacuum. It's reasonable
to believe that examiners from those
agencies may begin to apply this model
for unanticipated overdraft fees in
their community bank examinations. "
Rhonda Thomas-Whitley, ICBA
vice president and regulatory
counsel, agrees: " The circular will
definitely have a regulatory impact on
ICBA's response to the overdraft fee circular
In response to President Biden's remarks and release of CFPB
Circular 2022-6, ICBA president and CEO Rebeca Romero Rainey
issued a statement in support of overdraft protection services
offered to bank customers. She noted that the president's
comments mischaracterize the services community banks offer
their customers for critical financial solutions and safeguards,
and that the fees associated with programs are fully disclosed
to customers. In November 2022, ICBA submitted a written
response to CFPB director Rohit Chopra about the circular.
Visit icba.org/advocacy for more information.
" The Circular will
definitely have a
regulatory impact on
community banks, even
without the supervisory
oversight of the CFPB. "
-RHONDA THOMAS-WHITLEY, ICBA
fees for years, " Thomas-Whitley says.
" Now it appears that those same
disclosures, fee schedules and their
associated implementation may not
be sufficient. It is difficult to conceive
that overdraft fees and practices are
unanticipated when they have been so
thoroughly disclosed to customers and
vetted by examiners. "
At the time of writing, CFPB had
issued the first report of enforcement
under the circular.
community banks, even without the
supervisory oversight of the CFPB. "
While community banks have
offered overdraft protection to their
customers for decades and have been
subject to compliance monitoring,
internal and external audits, and
federal and state bank examinations,
the CFPB's overdraft fee circular
and public statements by the Biden
administration now subject their
programs to a change in standards.
" Examiners have scrutinized account
disclosures, fee schedules, bank
procedures and records of overdraft
" Community banks have been
dedicated to comprehensive reviews
of their disclosures and procedures
for years, " Whitley says. " Banks have
found themselves in a situation where
they are following the rules but are
being scrutinized by the same agencies
that make the rules. How do we
capture and evaluate what will fall with
the next shoe?
" Bankers are put in the position
of monitoring trends and available
guidance but may be in a holding
pattern to see how they play out from
anecdotal feedback or issuances
from CFPB or their primary federal
bank regulators. "
Mary Thorson Wright is a writer
in Virginia.
independentbanker.org // 25
http://www.icba.org/advocacy http://www.independentbanker.org
Independent Banker - February 2023

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