[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.
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\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]