Menendez presses big bank CEOs about the positive impact of the CFPB

WASHINGTON, D.C. – U.S. Senator Bob Menendez (D-N.J.), a senior member of the U.S. Senate Committee on Banking, Housing, and Urban Affairs, highlighted the positive impact that the Consumer Financial Protection Bureau (CFPB) has had on consumers by asking the CEOs of the nation’s largest banks – JPMorgan Chase & Co., Mr. Jamie Dimon, Bank of America, Mr. Brian Moynihan, Citigroup, Ms. Jane Fraser, and Wells Fargo & Company, Mr. Charles Scharf, about the amount of money in the form of redresses and payments for various violations they have returned to customers at the agency’s direction.

“For over a decade, the CFPB has stood up for everyday Americans and fought back against abusive and unlawful practices by large businesses, including some of the banks in this room,” Menendez said. “So, from just the four of you, that’s over four billion dollars – it’s amazing you don’t know the number because they are not small in nature – returned to hardworking consumers in the past dozen years. And yet this critical agency is under constant attack by my Republican colleagues, a lawsuit before the Supreme Court is threatening its very existence, and time and again we have seen why the CFPB is so necessary, and why I intend to continue to fight for it. Otherwise, that would’ve been four billion dollars out of the pockets of U.S. consumers.”

The Senator further emphasized the importance of the CFPB by asking about how losing safe harbor provisions like the Qualified Mortgage rule would impact their bank’s mortgage lending. The Senator called attention to the lawsuit currently before the Supreme Court over the CFPB’s funding structure, which has the potential to upend every rule, guidance, and order the CFPB has ever issued.

“This is not just harmful for consumers; I think it’s dangerous to the financial system. The CFPB doesn’t just issue regulations, they also provide safe harbor provisions like the Qualified Mortgage rule, which protects mortgage lenders from certain lawsuits,” Menendez said. “If you would lose this safe harbor totally, it seems to be pretty remarkable based on previous testimony of how important the safe harbor provisions would be to bank’s mortgage abilities that you would suggest that it would have no effect whatsoever. We’re already in the midst of an affordable housing crisis, and eliminating the CFPB could have a disastrous impact on the mortgage market and make it harder for families to buy a home.”

The Senator also highlighted Citigroup’s continued profitability despite eliminating overdraft fees last year, and asked the CEOs of Bank of America, JPMorgan Chase & Co., and Wells Fargo if there are aware that Black and Hispanic households disproportionately incur overdraft and nonsufficient funds (NSF) fees.

“Now, while some banks have either decreased or eliminated overdraft fees altogether, in large part due to increased scrutiny and oversight, banks still collected an estimated $7.7 billion dollars in 2022 in overdraft and nonsufficient fund fees,” Menendez said. “So, I suggest you call Ms. Fraser after this hearing to figure out how you can still be able to eliminate the fees in its entirety and still run a profitable bank. Charging the fees is a choice – and one that disproportionately harms black and brown communities. And this is something that you could do that would change the course of events for a significant part of the consumer base.”

The Senator also noted that the number of physical bank branches in the U.S. has been trending downward for some time, which has left more and more residents in so called “banking deserts” facing difficulties in carrying out basic financial tasks such as paying bills and depositing checks. The Senator concluded his questioning by asking the panel of witnesses what are some ways Congress can ensure communities continue to have access to basic banking services.

“A Philadelphia Federal Reserve report found that bank closures during the pandemic resulted in the number of banking deserts in the Third District states of New Jersey, Pennsylvania, and Delaware rising from 48 to 63. Now, I understand part of this is mobile and online banking, but there are many who do not have the abilities to do that,” Menendez said. “I will close by simply saying I would commend to all of you that you look at how your practices effect particularly minority communities, including on this issue. You have a disproportionate effect and there is something you can do about the largest growing parts of the American society that would be beneficial to you and beneficial to them.”

Earlier this month, Sen. Menendez asked the Director of the Consumer Financial Protection Bureau (CFPB), Rohit Chopra, about what the CFPB can do to rein in excessive overdraft fees during a Sente Banking, Housing and Urban Affairs Committee hearing.

In June, Sen. Menendez highlighted the importance of the CFPB by asking Director Rohit Chopra about who would protect consumers if the CFPB was defunded. Sen. Menendez signed an amicus brief in the Supreme Court case CFPB v. Community Financial Services Association of America, defending the CFPB’s funding structure as constitutional. In 2017, the Senator signed an amicus brief in support of the CFPB’s independence.

In March, Sen. Menendez and his Colleagues led an effort to urge financial institutions and regulators to help people keep their hard-earned cash safe from fraud and scams, especially as scammers find new ways and employ sophisticated schemes to dupe customers using instant peer-to-peer payment systems like Zelle to send money on the platform under fraudulent pretenses. In December 2022, during a Senate Banking hearing, Sen. Menendez urged CFPB Director Rohit Chopra to investigate customer service issues with MOHELA, and pressed Director Chopra on the agency’s process towards issuing agency guidance to ensure consumers are protected from Zelle-related fraud.