[House Report 118-618]
[From the U.S. Government Publishing Office]


118th Congress    }                                      {     Report
                        HOUSE OF REPRESENTATIVES
 2d Session       }                                      {     118-618

======================================================================

 
  PROVIDING FOR CONGRESSIONAL DISAPPROVAL UNDER CHAPTER 8 OF TITLE 5, 
  UNITED STATES CODE, OF THE RULE SUBMITTED BY THE BUREAU OF CONSUMER 
FINANCIAL PROTECTION RELATING TO ``CREDIT CARD PENALTY FEES (REGULATION 
                                  Z)''

                                _______
                                

 July 30, 2024.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

 Mr. McHenry, from the Committee on Financial Services, submitted the 
                               following

                              R E P O R T

                             together with

                             MINORITY VIEWS

                      [To accompany H.J. Res. 122]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Financial Services, to whom was referred 
the joint resolution (H.J. Res. 122) providing for 
congressional disapproval under chapter 8 of title 5, United 
States Code, of the rule submitted by the Bureau of Consumer 
Financial Protection relating to ``Credit Card Penalty Fees 
(Regulation Z)'', having considered the same, reports favorably 
thereon without amendment and recommends that the joint 
resolution do pass.

                                CONTENTS

                                                                   Page
Purpose and Summary..............................................     2
Background and Need for Legislation..............................     2
Related Hearings.................................................     2
Committee Consideration..........................................     2
Committee Votes..................................................     2
Committee Oversight Findings.....................................     4
Performance Goals and Objectives.................................     4
Congressional Budget Office Estimates............................     4
New Budget Authority, Entitlement Authority, and Tax Expenditures     5
Federal Mandates Statement.......................................     5
Advisory Committee Statement.....................................     5
Applicability to Legislative Branch..............................     5
Earmark Identification...........................................     5
Duplication of Federal Programs..................................     5
Section-by-Section Analysis of the Legislation...................     6
Minority Views...................................................     7

                          PURPOSE AND SUMMARY

    Introduced on March 29, 2024, by Representative Andy Barr, 
H.J. Res. 122, a resolution providing for congressional 
disapproval under chapter 8 of title 5, United States Code, of 
the rule submitted by the Consumer Financial Protection Bureau 
relating to credit card penalty fees, would rescind the 
Consumer Financial Protection Bureau's (CFPB) rule to reduce 
the existing safe harbor for credit card late fees.

                  BACKGROUND AND NEED FOR LEGISLATION

    On March 5, 2024, the CFPB finalized a rule to reduce the 
existing safe harbor for credit card late fees to $8 from the 
current level of $30 for the first violation and $41 for 
subsequent violations. The credit card late fee rule will harm 
consumers by shifting costs to responsible consumers who pay on 
time in the form of higher annual fees and higher interest 
rates. The rule lacks the robust analysis and support required 
under the Administrative Procedure Act, inexplicably carves out 
small issuers, and fails to acknowledge the important role that 
late fees play in encouraging timely payments.

                            RELATED HEARINGS

    Pursuant to clause 3(c)(6) of rule XIII, the following 
hearings were used to develop H.J. Res. 122: The Subcommittee 
on Financial Institutions and Monetary Policy of the Committee 
on Financial Services held a hearing on April 16, 2024, titled 
``Agency Audit: Reviewing CFPB Financial Reporting & 
Transparency.''

                        COMMITTEE CONSIDERATION

    The Committee on Financial Services met in open session on 
April 17, 2024, and ordered H.J. Res. 122 to be reported 
favorably to the House by a recorded vote of 28 ayes to 22 nays 
(Record vote no. FC-138), a quorum being present.

                            COMMITTEE VOTES

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the order to report legislation and amendments thereto. H.J. 
Res. 122 was ordered reported favorably to the House by a 
recorded vote of 28 ayes to 22 nays (Record vote no. FC-138), a 
quorum being present.


    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                      COMMITTEE OVERSIGHT FINDINGS

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the findings and recommendations of 
the Committee, based on oversight activities under clause 
2(b)(1) of rule X of the Rules of the House of Representatives, 
are incorporated in the descriptive portions of this report.

                    PERFORMANCE GOALS AND OBJECTIVES

    Pursuant to clause 3(c)(4) of rule XIII of the Rules of the 
House of Representatives, the goal of H.J. Res. 122 is to 
rescind the CFPB's rule to reduce the existing safe harbor for 
credit card late fees.

                 CONGRESSIONAL BUDGET OFFICE ESTIMATES

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
provided by the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974:

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    H.J. Res. 122 would disapprove a final rule published by 
the Consumer Financial Protection Bureau (CFPB) in March 
2024.\1\ By invoking a legislative process established in the 
Congressional Review Act, the resolution would repeal the rule 
and prohibit the agency from issuing the same or any similar 
rule in the future. The rule, which caps at $8 per instance the 
amount that large credit card issuers may charge in late fees, 
is now under a nationwide injunction because of ongoing 
litigation.
---------------------------------------------------------------------------
    \1\Consumer Financial Protection Bureau, ``Credit Card Penalty Fees 
(Regulation Z),'' Final Rule, 89 Fed. Reg. (March 15, 2024), https://
tinyurl.com/y3d7rdp7.
---------------------------------------------------------------------------
    Using information from the CFPB, CBO estimates that any 
cost to the agency to repeal the final rule and provide 
guidance to large credit card issuers would be insignificant. 
The CFPB is permanently authorized to spend amounts transferred 
from the combined earnings of the Federal Reserve in an amount 
necessary to carry out its responsibilities; that spending is 
classified as direct spending.
    The CBO staff contact for this estimate is David Hughes. 
The estimate was reviewed by H. Samuel Papenfuss, Deputy 
Director of Budget Analysis.
                                         Phillip L. Swagel,
                             Director, Congressional Budget Office.

   NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX EXPENDITURES

    The Committee has requested but not received an estimate 
from the Director of the Congressional Budget Office. However, 
pursuant to clause 3(c)(2) of rule XIII of the Rules of the 
House of Representatives, once an estimate has been prepared by 
the Director of the Congressional Budget Office, as required by 
section 402 of the Congressional Budget Act of 1973, the 
Committee will adopt as its own the estimate of new budget 
authority, entitlement authority, or tax expenditures or 
revenues.

                       FEDERAL MANDATES STATEMENT

    The Committee has requested but not received from the 
Director of the Congressional Budget Office an estimate of the 
Federal mandates pursuant to section 423 of the Unfunded 
Mandates Reform Act. The Committee will adopt the estimate once 
it has been prepared by the Director.

                      ADVISORY COMMITTEE STATEMENT

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                  APPLICABILITY TO LEGISLATIVE BRANCH

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

                         EARMARK IDENTIFICATION

    With respect to clause 9 of rule XXI of the Rules of the 
House of Representatives, the Committee has carefully reviewed 
the provisions of the bill and states that the provisions of 
the bill do not contain any congressional earmarks, limited tax 
benefits, or limited tariff benefits within the meaning of the 
rule.

                    DUPLICATION OF FEDERAL PROGRAMS

    Pursuant to clause 3(c)(5) of rule XIII of the Rules of the 
House of Representatives, the Committee states that no 
provision of the bill establishes or reauthorizes a program of 
the Federal Government known to be duplicative of another 
Federal program, including any program that was included in a 
report to Congress pursuant to section 21 of the Public Law 
111-139 or the most recent Catalog of Federal Domestic 
Assistance.

             SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION

    This Joint Resolution disapproves the rule submitted by the 
Consumer Financial Protection Bureau to reduce the existing 
safe harbor for credit card late fees and asserts that such 
rule shall have no force or effect.

                             MINORITY VIEWS

    We oppose H.J. Res. 122, as it would nullify the Consumer 
Financial Protection Bureau's (CFPB) recently finalized rule to 
limit junk fees. Specifically, the rule would generally limit 
credit card companies' late fees to no more than $8. Today, 
most large credit card companies typically charge anywhere from 
$32 to $40 if you are late on your credit card payment. 
However, the CFPB found in its research that this amount far 
exceeds what is reasonable and proportional to the violation.
    The Credit Card Accountability Responsibility and 
Disclosure Act of 2009 (CARD Act) states that credit card late 
fees should be ``reasonable and proportional'' to the costs 
incurred by issuers to handle late payments. But over time fees 
have been raised by the card issuers enormously. By updating 
the safe harbor that generally sets a late fee cap at no more 
than $8, and eliminating automatic further fee increases tied 
to inflation, the rule addresses the predatory practices that 
have allowed credit card companies to take billions of dollars 
from hard-working Americans through back-end fees. The final 
rule only applies to the largest credit card issuers that have 
more than 1 million accounts, and it permits them to charge a 
higher fee only if they demonstrate it is reasonable and 
proportional to the delayed payment. This rule will save 
consumers more than $9 billion annually, or $220 every year for 
more than 45 million people typically charged these fees.
    This rule is part of the CFPB's broader work to combat junk 
fees, alongside other agencies and the Biden Administration. 
Indeed, CFPB's junk fee initiative is resonating with a lot of 
consumers. For example, the agency received more than 80,000 
comments from the public when it launched the initiative. 
Furthermore, four out of five Americans, including 77% of 
Republicans, support the CFPB and its mission. Simply put, we 
oppose this resolution as it will result in higher credit card 
fees for working families. Research by the CFPB has 
consistently shown that low-income individuals and people of 
color bear the brunt of these fees, with those making less than 
$32,000 annually paying twice as much in late fees as those 
making $150,000.
    Finally, more than 90 organizations oppose H.J. Res. 122, 
including: Accountable.US, AK PIRG, Alliance 85, American 
Economic Liberties Project, Americans for Financial Reform, 
Arkansas Community Organizations, Autistic Self Advocacy 
Network (ASAN), Blue Future, CAMEO, CASA of Oregon, Center for 
Economic Integrity, Center for Economic Justice, Citizen 
Action--Illinois, Coastal Enterprises, Inc., Communities First 
Initiative, Community Service Society of New York, Consumer 
Action, Consumer Federation of America, Consumer Reports, 
Consumers for Auto Reliability and Safety, Cypress Hills Local 
Development Corp, Delaware Community Reinvestment Action 
Council, Inc., Demand Progress, Economic Empowerment Center DBA 
Lending Link, ELA, Equal Rights Advocates, Faith in Action 
National Network, Fifth Avenue Committee, Georgia Advancing 
Communities Together, Inc., Georgia Watch, HEAL (Health, 
Environment, Agriculture, Labor) Food Alliance, Health Care for 
America Now (HCAN), Hip Hop Caucus, Indiana Community Action 
Poverty Institute, Indivisible, Iowa Citizens for Community 
Improvement, Jewish Women International, JustUS Coordinating 
Council, Kentucky Equal Justice Center, Legal Aid Center of 
Southern Nevada Legal, Aid Justice Center, Legal Services of 
New Jersey Maui, Economic Opportunity, Inc., Mission Asset 
Fund, Mountain State Justice, Inc., NAACP South Carolina State 
Conference, National Association for Latino Community Asset 
Builders, National Association of Consumer Advocates, National 
Consumer Law Center, National Disability Rights Network (NDRN) 
National, Employment Law Project, National Fair Housing 
Alliance, NETWORK Lobby for Catholic Social Justice, Nevada 
Coalition of Legal Service Providers, New Economy Project, New 
Yorkers for Responsible Lending, North Carolina Council of 
Churches Omni, Center for Peace Justice Ecology Oregon, 
Consumer Justice, Philadelphia Unemployment Project, 
Progressive Change Campaign Committee (PCCC), Progressive 
Leadership Alliance of Nevada Prosperity Works, Public Citizen 
Public Counsel, Public Good Law Center, Public Justice Center, 
RAISE Texas, Revolving Door Project, Rise Economy, Rural 
Housing Opportunities Corp., SC Christian Action Council, South 
Carolina Appleseed Legal Justice Center, South Carolina 
Association for Community Economic Development, Texas 
Appleseed, The Greenlining Institute, The National Coalition 
for Asian Pacific American Community Development (National 
CAPACD), The One Less Foundation, TURN--The Utility Reform 
Network, U.S. PIRG, Virginia Citizens Consumer Council, 
Virginia Organizing, VOICE--Oklahoma, WESPAC Foundation, Inc., 
West Virginia Center on Budget and Policy, William E. Morris 
Institute for Justice, Woodstock Institute, Young Invincibles, 
20/20 Vision.
    For these reasons, we oppose H.J. Res. 122.

            Sincerely,
                                   Maxine Waters,
                                           Ranking Member.
                                   Nydia M. Velazquez,
                                   Brad Sherman,
                                   Gregory W. Meeks,
                                   Stephen F. Lynch,
                                   Al Green,
                                   Emanuel Cleaver II,
                                   Jim Himes,
                                   Bill Foster,
                                   Joyce Beatty,
                                   Juan Vargas,
                                   Sean Casten,
                                   Ayanna Pressley,
                                   Rashida Tlaib,
                                   Sylvia R. Garcia,
                                   Nikema Williams,
                                           Members of Congress.

                                  [all]