The Consumer Financial Protection Bureau issued a proposed rule on overdraft services that would exempt community banks under $10 billion in assets.

Details: Under the CFPB’s proposed rule, banks over $10 billion in assets would have three options:

  • Extend overdraft services by treating them as extensions of credit and complying with federal lending laws, including disclosing any applicable interest rate.

  • Charge the amount that would allow them to break even on the cost of providing the overdraft.

  • Charge a fee at an established benchmark, proposed to range from $3 to $14 depending on how the CFPB assesses industry data on overdraft costs.

ICBA Response: In a national news release, ICBA said it is encouraged the proposal exempts community banks with less than $10 billion in assets, which recognizes that community banks offer specialized overdraft services that are customized to the needs of their customers and local markets. ICBA also said it will strongly advocate tiered regulation for community banks over $10 billion and urged policymakers to cautiously consider the impact of restrictions on deposit account fees.

Outlook: “ICBA looks forward to reviewing today’s proposal and submitting comments as we continue to work with the CFPB to ensure this rulemaking does not negatively impact community banks or the local customers and communities they serve,” ICBA President and CEO Rebeca Romero Rainey said.