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CFPB update on OD/NSF fee revenue
The CFPB has issued a data spotlight report that shows that many banks changed their OD/NSF fee policies in 2022, and reported annual overdraft/NSF revenue has dropped by $6.1 billion since before the pandemic — a reduction of more than half — saving the average household who overdrafts $185 per year. This reflects a nearly $2 billion annual reduction in NSF fees, and a roughly $4 billion annual reduction in overdraft fees.
In 2023, overdraft/NSF fees were approximately $1.8 billion lower than in 2022, a 24% decrease. However, banks appear to have stopped significantly reducing overdraft fees, as their major policy changes have taken effect and further policy changes have slowed. Following five straight quarterly declines in overdraft/NSF revenue, such revenue remained flat across all quarters of 2023. Even with the substantial reductions in fees versus prior years, consumers paid over $5.8 billion in 2023 in reported overdraft/NSF fees. The report indicates that evidence continues to suggest that financial institutions are generally not increasing other checking account fees to compensate for reduced overdraft/NSF revenue. Across all reporting banks, combined account maintenance and ATM fees remained flat from 2019 to 2023.
The Bureau stated that, since the CFPB heightened its supervisory attention on overdraft and NSF fees in 2022, financial institutions have agreed to refund over $240 million to consumers—approximately $177 million in "unfair unanticipated overdraft fees" charged on transactions that were authorized when the consumer had sufficient funds, and approximately $64 million in NSF fees charged on the same transaction that already incurred an NSF fee when it was previously declined. This $240 million reflects $120 million that the CFPB previously announced in October 2023, and an additional more than $120 million that financial institutions have agreed to refund since the period covered by that announcement.
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FDIC Board report on restoration plan
The FDIC Board of Directors yesterday released the first semiannual update of 2024 on the Restoration Plan for the agency's Deposit Insurance Fund (DIF). Staff project that the reserve ratio remains on track to reach the statutory minimum of 1.35 percent ahead of the deadline of September 30, 2028.
As of December 31, 2023, the DIF reserve ratio was 1.15 percent, up from 1.11 percent as of June 30, 2023. The fund balance stood at $121.8 billion at the end of the year. Growth in the DIF balance in the second half of 2023 outpaced insured deposit growth, resulting in the increase of the reserve ratio.
On September 15, 2020, the FDIC established the Restoration Plan to restore the DIF reserve ratio to at least 1.35 percent by the statutory deadline, after extraordinary deposit growth during the first half of 2020 caused the DIF reserve ratio to decline below the statutory minimum of 1.35 percent. The Plan maintained the assessment rate schedules in place at the time.
On June 21, 2022, based on projections indicating that the reserve ratio was at risk of not reaching the required minimum by the statutory deadline, the FDIC Board amended the Restoration Plan. In conjunction with the Amended Restoration Plan, the FDIC Board increased deposit insurance assessment rates by 2 basis points for all insured depository institutions, effective in the first quarterly assessment period of 2023.
The Federal Deposit Insurance Act (FDI Act) requires that the FDIC Board adopt a restoration plan when the DIF's reserve ratio—the ratio of the fund balance relative to insured deposits—falls below 1.35 percent.
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CFPB and DOT to host hearing on airline and credit card rewards programs
The CFPB has announced it will join the Department of Transportation at 10:00 a.m. ET, May 9, 2024, to host a hearing on airline and credit card rewards programs. Members of the public will hear from CFPB Director Rohit Chopra and Secretary of Transportation Pete Buttigieg, who will moderate a discussion with industry representatives, labor leaders, and consumer advocates about competition issues and challenges that consumers are experiencing with airline and credit card rewards programs.
A livestream of the event will be available on the day of the hearing.
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OFAC targets networks facilitating trade and transfers for Iranian military
OFAC yesterday sanctioned over one dozen entities, individuals, and vessels that have played a central role in facilitating and financing the clandestine sale of Iranian unmanned aerial vehicles (UAVs) for Iran's Ministry of Defense and Armed Forces Logistics (MODAFL), which itself is involved in supporting Iran's Islamic Revolutionary Guard Corps (IRGC) and Russia's war in Ukraine.
For identification information on the individuals, entities, vessels, and aircraft that OFAC designated, see BankersOnline's April 25, 2024, OFAC Update.
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