Federal credit unions are often seen as the kinder, gentler version of big banks, since they are designed to serve members of modest means without a profit motive. But data from a new reporting rule we reviewed found that the largest credit unions made nearly $4 billion charging their members unnecessary overdraft fees last year.
Now, following industry lobbying on the issue, President Donald Trump’s top credit union regulator has revoked the junk-fee reporting rule, meaning credit unions will have more leeway to hide how they bilk consumers than the corporate banks to which they’re supposed to serve as an alternative.
The decision to hide credit unions’ junk-fee revenue preceded a March 27 Senate vote to overturn a government rule that cut the fees large banks and credit unions could charge consumers for spending more than they had in their accounts. The rule, finalized in December, capped the fee at $5, down from an average of $35 per overdraft.
If the House agrees to kill the rule, both banks and credit unions will once again have free rein to charge consumers far more than the negligible institutional cost of these overdrafts, and US households will lose out on an estimated $5 billion in junk-fee savings each year.
The credit union motto is “people helping people.” But the move to repeal the institutions’ junk-fee disclosure rule means they will likely be less accountable to consumers than traditional banks, which still have to report overdraft fee revenue, said Adam Rust, director of financial services for the consumer advocate group Consumer Federation of America. Such disclosures have been leading to corporate changes; after regulators began publishing junk-fee data, a number of large banks lowered or
Auteur: Freddy Brewster
