[House Hearing, 117 Congress]
[From the U.S. Government Publishing Office]
THE END OF OVERDRAFT FEES?
EXAMINING THE MOVEMENT TO
ELIMINATE THE FEES COSTING
CONSUMERS BILLIONS
=======================================================================
HYBRID HEARING
BEFORE THE
SUBCOMMITTEE ON CONSUMER PROTECTION
AND FINANCIAL INSTITUTIONS
OF THE
COMMITTEE ON FINANCIAL SERVICES
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED SEVENTEENTH CONGRESS
SECOND SESSION
__________
MARCH 31, 2022
__________
Printed for the use of the Committee on Financial Services
Serial No. 117-76
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
__________
U.S. GOVERNMENT PUBLISHING OFFICE
47-274 PDF WASHINGTON : 2022
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HOUSE COMMITTEE ON FINANCIAL SERVICES
MAXINE WATERS, California, Chairwoman
CAROLYN B. MALONEY, New York PATRICK McHENRY, North Carolina,
NYDIA M. VELAZQUEZ, New York Ranking Member
BRAD SHERMAN, California FRANK D. LUCAS, Oklahoma
GREGORY W. MEEKS, New York BILL POSEY, Florida
DAVID SCOTT, Georgia BLAINE LUETKEMEYER, Missouri
AL GREEN, Texas BILL HUIZENGA, Michigan
EMANUEL CLEAVER, Missouri ANN WAGNER, Missouri
ED PERLMUTTER, Colorado ANDY BARR, Kentucky
JIM A. HIMES, Connecticut ROGER WILLIAMS, Texas
BILL FOSTER, Illinois FRENCH HILL, Arkansas
JOYCE BEATTY, Ohio TOM EMMER, Minnesota
JUAN VARGAS, California LEE M. ZELDIN, New York
JOSH GOTTHEIMER, New Jersey BARRY LOUDERMILK, Georgia
VICENTE GONZALEZ, Texas ALEXANDER X. MOONEY, West Virginia
AL LAWSON, Florida WARREN DAVIDSON, Ohio
MICHAEL SAN NICOLAS, Guam TED BUDD, North Carolina
CINDY AXNE, Iowa DAVID KUSTOFF, Tennessee
SEAN CASTEN, Illinois TREY HOLLINGSWORTH, Indiana
AYANNA PRESSLEY, Massachusetts ANTHONY GONZALEZ, Ohio
RITCHIE TORRES, New York JOHN ROSE, Tennessee
STEPHEN F. LYNCH, Massachusetts BRYAN STEIL, Wisconsin
ALMA ADAMS, North Carolina LANCE GOODEN, Texas
RASHIDA TLAIB, Michigan WILLIAM TIMMONS, South Carolina
MADELEINE DEAN, Pennsylvania VAN TAYLOR, Texas
ALEXANDRIA OCASIO-CORTEZ, New York PETE SESSIONS, Texas
JESUS ``CHUY'' GARCIA, Illinois
SYLVIA GARCIA, Texas
NIKEMA WILLIAMS, Georgia
JAKE AUCHINCLOSS, Massachusetts
Charla Ouertatani, Staff Director
Subcommittee on Consumer Protection and Financial Institutions
ED PERLMUTTER, Colorado, Chairman
GREGORY W. MEEKS, New York BLAINE LUETKEMEYER, Missouri,
DAVID SCOTT, Georgia Ranking Member
NYDIA M. VELAZQUEZ, New York FRANK D. LUCAS, Oklahoma
BRAD SHERMAN, California BILL POSEY, Florida
AL GREEN, Texas ANDY BARR, Kentucky
BILL FOSTER, Illinois ROGER WILLIAMS, Texas
JUAN VARGAS, California BARRY LOUDERMILK, Georgia
AL LAWSON, Florida TED BUDD, North Carolina
MICHAEL SAN NICOLAS, Guam DAVID KUSTOFF, Tennessee, Vice
SEAN CASTEN, Illinois Ranking Member
AYANNA PRESSLEY, Massachusetts, JOHN ROSE, Tennessee
Vice Chair WILLIAM TIMMONS, South Carolina
RITCHIE TORRES, New York
C O N T E N T S
----------
Page
Hearing held on:
March 31, 2022............................................... 1
Appendix:
March 31, 2022............................................... 39
WITNESSES
Thursday, March 31, 2022
Crawford-Hicks, Elyse, Consumer Policy Counsel, Americans for
Financial Reform (AFR)......................................... 6
Greer, Jeremie, Co-Founder/Executive Director, Liberation in a
Generation..................................................... 5
Kundert, Paul, President and CEO, University of Wisconsin (UW)
Credit Union................................................... 8
Sueiro, Santiago, Senior Policy Analyst, UnidosUS................ 9
Zywicki, Todd, George Mason University Foundation Professor of
Law, Antonin Scalia Law School, George Mason University........ 11
APPENDIX
Prepared statements:
Crawford-Hicks, Elyse........................................ 40
Greer, Jeremie............................................... 43
Kundert, Paul................................................ 47
Sueiro, Santiago............................................. 52
Zywicki, Todd................................................ 59
Additional Material Submitted for the Record
Perlmutter, Hon. Ed:
Written statement of the American Bankers Association........ 86
Written statement of Chime................................... 95
Written statement of Color of Change......................... 97
Written statement of the Consumer Bankers Association........ 100
Written statement of the Consumer Federation of America...... 124
Joint written statement of the Credit Union National
Association and the National Association of Federally-
Insured Credit Unions...................................... 128
Written statement of the Credit Union National Association... 130
Written statement of Terri Friedline, Associate Professor of
Social Work at the University of Michigan.................. 135
Written statement of Gusto................................... 145
Written statement of the Independent Community Bankers of
America.................................................... 148
Written statement of the Merchants Payments Coalition........ 151
Written statement of the National Association of Federally-
Insured Credit Unions...................................... 153
Written statement of the National Consumer Law Center........ 155
Written statement of Corey Stone............................. 166
Written statement of the Virginia Credit Union League........ 175
Maloney, Hon. Carolyn:
Chart, ``Overdraft/NSF metrics for Top 20 banks based on
overdraft/NSF revenue reported''........................... 177
McHenry, Hon. Patrick:
Written statement of the Independent Community Bankers of
America.................................................... 148
THE END OF OVERDRAFT FEES?
EXAMINING THE MOVEMENT TO
ELIMINATE THE FEES COSTING
CONSUMERS BILLIONS
----------
Thursday, March 31, 2022
U.S. House of Representatives,
Subcommittee on Consumer Protection
and Financial Institutions,
Committee on Financial Services,
Washington, DC
The subcommittee met, pursuant to notice, at 10 a.m., in
room 2128, Rayburn House Office Building, Hon. Ed Perlmutter
[chairman of the subcommittee] presiding.
Members present: Representatives Perlmutter, Green, Foster,
Vargas, Pressley, Torres; Luetkemeyer, Posey, Barr, Williams of
Texas, Loudermilk, Budd, Kustoff, Rose, and Timmons.
Ex officio present: Representative Waters.
Also present: Representative Maloney.
Chairman Perlmutter. The Subcommittee on Consumer
Protection and Financial Institutions will come to order.
Without objection, the Chair is authorized to declare a
recess of the subcommittee at any time. Also, without
objection, members of the full Financial Services Committee who
are not members of the subcommittee are authorized to
participate in this hearing.
Today's hearing is entitled, ``The End of Overdraft Fees?
Examining the Movement to Eliminate the Fees Costing Consumers
Billions.''
I now recognize myself for 4 minutes to give an opening
statement.
In 1778, William Hog, a merchant in Edinburgh, faced a cash
flow problem. His business was doing well, but his customers
were often not timely in their payments, meaning his bank
account balance would fluctuate and often drop to zero, which
made it difficult for him to pay his own suppliers. So he went
to his bank, the Royal Bank of Scotland, to work out a deal to
help his business. Under the arrangement they came to, Mr. Hog
could periodically draw more money from his account than he had
in his deposits. In return, the bank would charge him interest
on the negative balance. They invented what is known today as
an overdraft.
While this overdraft service proved beneficial to both
parties in this example of Mr. Hog and the Royal Bank of
Scotland, this was not true in all cases, as more banks began
offering this product. Some businesses without such sound
revenue and business practices found themselves taking on more
debt through overdraft than they could repay.
Importantly, this service was created in the context of
providing liquidity to businesses with sound revenue but poor
cash flow, and today, financial institutions offer overdraft
services to both businesses and consumers. Overdraft services
have evolved significantly over the past 240 years or so, but
the core concept is the same, and many of the fundamental
issues we will be discussing today are not new. In fact, we
dealt with this very issue about 10 years ago, and every so
often, we should address this to see where we are.
However, the current scale and growth of overdraft and non-
sufficient funds fees has caught the attention of consumer
groups, this committee, and the regulators. In an average year,
consumers in the United States pay around $10 billion to $12
billion in overdraft fees and non-sufficient funds fees, and
just 9 percent of consumers make up 80 percent of those
overdraft fees.
Additionally, these types of fees impact people of color at
a disproportionate rate. Studies have found that banks with
branches in predominantly Black neighborhoods charge more for
overdraft, on average, and Black customers are overrepresented
in those who report paying more than $100 in fees in the past
year.
In December, the Consumer Financial Protection Bureau
(CFPB) published data suggesting that many financial
institutions are overly-reliant on the revenue from overdraft
fees. However, the market is changing. Recently, many banks and
credit unions voluntarily adjusted their overdraft programs to
eliminate or reduce fees or to create better consumer
protections and more transparency. Additionally, many non-bank
fintech companies are also offering products aimed at helping
avoid overdraft by improving notifications and information
provided to consumers or partnering with depository
institutions to offer no- or low-fee accounts directly to
consumers.
Another program gaining momentum in recent years is BankOn.
This initiative is a partnership between the Cities for
Financial Empowerment (CFE) Fund, financial institutions, and
local governments, with the goal of providing low-cost, basic
bank accounts to unbanked and underbanked households. These
accounts do not allow overdraft fees.
We have two bills noticed with today's hearing. First, H.R.
4277, the Overdraft Protection Act of 2021, by Representative
Maloney--who has been a champion on these issues--which would
strengthen protections and disclosures for consumers with
respect to overdraft fees.
And second, we have a discussion draft entitled the,
``Expanding Access to Affordable Bank Accounts Act,'' which
would require larger financial institutions to offer at least
one bank account option that does not charge consumers
overdraft and non-sufficient funds (NSF) fees.
With that, I will yield to the ranking member of the
subcommittee, the gentleman from Missouri, Mr. Luetkemeyer, for
his opening remarks.
Mr. Luetkemeyer. Thank you, Mr. Chairman, and thank you for
having this hearing today on this important topic.
On December 1, 2021, the CFPB issued a press release on
overdraft fees entitled, ``CFPB Research Shows Banks' Deep
Dependence on Overdraft Fees.'' This press release alludes to
exploitative fees being charged by financial institutions for
overdraft products, and went so far as to specifically name and
shame three financial institutions.
To back up this claim, the CFPB put together two data sets
on overdraft and non-sufficient funds fees: one data set is
from 2014, 8 years ago, and fails to consider new innovations
in overdrafts; and the other data set shows that revenue from
overdraft and NSF fees only represented 2 percent of bank
revenue in 2019. So, the CFPB's own data would suggest that
financial institutions, in fact, are not deeply dependent on
overdraft fees.
The truth is that overdraft is a legitimate short-term
liquidity product that provides a vital service for consumers.
According to a study by a global data intelligence firm,
Curinos, consumers make highly-informed choices about when to
use overdraft services based on account information and
disclosure of the fees and procedures. Even President Biden's
Acting Comptroller of the Comptroller, Michael Hsu,
acknowledged the importance of overdraft products when he said,
``Limiting overdrafts may limit the financial capacity for
those who need it most.''
The latest actions of the CFPB continue a dangerous trend
from my colleagues on the other side of the aisle. At a time
when 50 percent of Americans would have difficulty paying a
$400 emergency expense, the actions of this committee on
financial regulators aimed to reduce consumers' ability to
access short-term liquidity financial products. Democrats and
the Administration have regulated banks out of small-dollar
loans, are opposed to overdrafts, and payday lenders, and have
made disparaging comments on innovative products such as, ``buy
now, pay later,'' and earned wage access.
So, I ask my colleagues, where are the 40 percent of
American consumers supposed to go when they need a $400 loan,
or $400 for any kind of emergency? I would be happy to get an
answer to that question.
The CFPB did not stop with overdraft fees. On February 2,
2022, the CFPB released a request for information on fees
related to other consumer financial products and services, or
what the CFPB is calling, ``junk fees.''
First, let's acknowledge that there is no legal authority
for the CFPB to define the term, ``junk fee,'' or any other
term for that matter, and there is even less authority to act
as a price-setter in the consumer financial market. The CFPB
wants information on any fees associated with consumer
financial products that seem too high or were unexpected. These
are intentionally-vague terms in order for the CFPB to create a
subjective measurement that has no bearing on the legality of
any consumer financial product or service. Suggesting otherwise
would be insinuating that private markets should not be able to
set prices for products and services, which is a core principle
of our economy. We don't need the government setting prices for
everything.
The CFPB has also failed to take into account the lengthy
disclosure requirements that consumer financial products
already comply with under the Truth in Lending Act (TILA), and
fee disclosures promulgated by the CFPB itself. For example,
the CFPB specifically lists pre-paid cards as a financial
product they want information on, but what the CFPB and
Director Chopra fail to mention is that the CFPB issued a
rulemaking that was finalized by Director Cordray in 2016 which
requires multiple significant disclosures for the pre-paid card
industry.
The CFPB is quite literally manufacturing a crisis about
hidden fees for financial products when they are the very
people who made up the disclosure regime, which shows that this
request for information (RFI) is not about fees facing
consumers, but is another attempt by the CFPB to denigrate
legally-operating businesses by any means possible, and exert
as much control as possible over the industry, and thus the
economy. It is simply a power grab.
Ranking Member McHenry and I sent a letter to Director
Chopra asking him to clarify many aspects of the overdraft and
junk fee proposals. I look forward to asking this panel about
what role the CFPB should have in the pricing of consumer
financial products.
With that, Mr. Chairman, I yield back.
Chairman Perlmutter. The gentleman yields back.
The Chair now recognizes the Chair of the full Financial
Services Committee, Chairwoman Waters, for 1 minute.
Chairwoman Waters. Thank you so very much, Chairman
Perlmutter.
For far too long, banks have been charging excessive
overdraft fees. And, of course, I am very troubled that
consumers of color pay twice as much in fees as White
consumers. So, I want to commend Representative Carolyn Maloney
for her steadfast work in proposing the overdraft reforms we
are considering today.
We have also not been shy in conducting megabank oversight,
and pressing their CEOs to reduce and eliminate these costly
fees, many of whom are beginning to do just that.
With a strong CFPB supporting our efforts by investigating
junk fees like these, we now have a growing list of banks that
are finally reducing or eliminating overdraft fees.
So, I look forward to hearing from our witnesses on these
issues and how we should build on this momentum.
I yield back. Thank you.
Chairman Perlmutter. The gentlelady yields back.
Without objection, statements from the following
organizations and people will be entered into the record: the
American Bankers Association; Chime; Color of Change; the
Consumer Bankers Association; the Credit Union National
Association (CUNA); the National Association of Federally-
Insured Credit Unions (NAFCU); the National Consumer Law Center
on behalf of its low-income clients; and Terri Friedline,
Ph.D., Associate Professor of Social Work at the University of
Michigan.
I am now pleased to welcome each of our witnesses, three of
whom are here in person, and two of whom are on video.
Mr. Jeremie Greer is the co-founder and executive director
of Liberation in a Generation. Mr. Greer's work has focused on
racial and economic justice, and he formerly worked at the
Government Accountability Office (GAO), the Local Initiatives
Support Corporation (LISC), and Prosperity Now.
Ms. Elyse Crawford-Hicks is a consumer policy counsel at
Americans for Financial Reform. Ms. Crawford-Hicks was
previously a staff attorney for United Policyholders, and she
holds degrees from the Stetson School of Business and Economics
at Mercer University, the Charleston School of Law, and Georgia
State University.
Mr. Paul Kundert is the president and CEO of UW Credit
Union. Mr. Kundert has led UW Credit Union for nearly 19 years,
and he formerly served on the board of directors of the Filene
Research Institute, a credit union industry think tank focused
on issues impacting consumer financial well-being and economic
empowerment.
Mr. Santiago Sueiro is a senior policy analyst with
UnidosUS. Mr. Sueiro serves as UnidosUS's institutional expert
on policy solutions related to reforming banking and lending
policies and consumer finance policy.
Finally, Mr. Todd Zywicki is the Foundation Professor of
Law with the Antonin Scalia Law School at George Mason
University. Mr. Zywicki is also a senior fellow at the Cato
Institute, and the former executive director of the George
Mason University Law & Economic Center.
I would like to welcome all of our witnesses here today.
Thank you for being here. You are reminded that your oral
testimony will be limited to 5 minutes. You should be able to
see a timer that will indicate how much time you have left, and
without objection, your written statements will be made a part
of the record.
Mr. Greer, you are now recognized for 5 minutes for your
testimony.
STATEMENT OF JEREMIE GREER, CO-FOUNDER/EXECUTIVE DIRECTOR,
LIBERATION IN A GENERATION
Mr. Greer. Thank you, Chairman Perlmutter, Ranking Member
Luetkemeyer, and members of the subcommittee, for holding this
important hearing and for the opportunity to testify today.
My name is Jeremie Greer, and I am the co-founder and co-
executive director of Liberation in a Generation. Liberation in
a Generation is a national movement support organization
founded to help build the power of people of color to transform
the economy.
Financial institutions, large and small, have the ability
and authority to unburden their customers from junk fees such
as overdraft charges. In the 4th quarter of 2021, commercial
banks and savings institutions collected over $72 billion, or
36 percent of their income, from fees. The assessment of these
fees has become part of their business model and their profit
margin. This burden has disproportionately fallen on consumers
who cannot afford to pay these fees. About 9 percent of all
consumers account for almost 80 percent of overdraft revenue,
and nearly half of all overdrafts are made by parents with
children under the age of 18.
In the age of COVID, with record unemployment and historic
levels of income volatility, consumers of color who have been
hit hardest by the pandemic paid over $4.5 billion in overdraft
fees. Black families paid about $8 million in bank fees in
2020, while Latinx families spent $1.1 billion in fees in the
same year.
Also, as millions of consumers are bounced out of the
financial system following the closure of their accounts due to
excessive overdrafts, one-third of households without bank
accounts have identified high fees as the reason that they
remain unbanked. And the unbanked comprise nearly half of Black
households.
These fees operate as an abusive form of high-cost credit
and are in no way better than a payday loan. To put it into
perspective, the CFPB found that a majority of overdraft fees
were incurred on transactions of $24 or less, and were repaid
within 3 days, meaning that a $34 overdraft fee would have an
annual percentage rate of 17,000 percent--17,000 percent. This
is in no way representative of a fair and inclusive financial
market.
It is our recommendation that Congress and the Biden
Administration act to bring an end to junk fees, such as
overdraft and non-sufficient funds fees. We have seen a number
of financial institutions already take this critical step. In
March, one of the largest banks in the country, Citigroup,
announced that it will end overdraft fees for consumers, and in
doing so they called it, ``a focus on financial inclusion,''
and I agree. And as Citi made their announcement, Capital One
announced that they would eliminate their bank overdraft fees
in 2022.
However, without pressure from Congress and the
Administration, we are leaving it up to banks to self-regulate,
while bringing in huge profits on the backs of predominantly
low-wealth customers, largely consumers of color. It is time
for Congress to act to relieve this burden.
Mr. Chairman, Mr. Ranking Member, and members of the
subcommittee, I appreciate the opportunity to testify and I am
happy to answer any questions that you may have.
[The prepared statement of Mr. Greer can be found on page
43 of the appendix.]
Chairman Perlmutter. Mr. Greer, thank you for your
testimony.
Ms. Crawford-Hicks, you are now recognized for 5 minutes
for your testimony.
STATEMENT OF ELYSE CRAWFORD-HICKS, CONSUMER POLICY COUNSEL,
AMERICANS FOR FINANCIAL REFORM (AFR)
Ms. Crawford-Hicks. Thank you, and good morning, Chairman
Perlmutter, Ranking Member Luetkemeyer, and members of the
subcommittee.
As a proud former military spouse of a Specialist in the
United States Army, I know firsthand that running a household
on military pay can be quite difficult for lower enlisted
personnel.
Every month, my husband, who had opted into overdraft
protection at one of the top 20 big banks, watched his pay get
eaten up by $35 overdraft fees, a cycle that continued paycheck
after paycheck until I, a D.C.-licensed attorney who was
stationed in California, was able to find employment after
jumping through strenuous licensing requirements for the State.
My husband and I are not alone. Overdraft fees are paid the
most by the people who can least afford them. These are fees
that: one, bear no relationship to the costs banks incur in
covering overdrafts; two, have the potential to explode into
hundreds of dollars in fees; and three, can be near impossible
to avoid for people living paycheck to paycheck.
According to research from the CFPB, overdraft fees have
become a cash cow for financial institutions. In 2019, banks
and credit unions charged more than $15 billion in overdraft
and non-sufficient funds fees, with these fees making up a
particularly large portion of smaller banks' net profits. This
money is mostly made off the backs of some of America's most
financially-vulnerable families, disproportionately affecting
communities of color.
Overdraft fees are a penalty for being poor or financially
insecure. Nearly 80 percent of overdraft fee revenue to banks
comes from 9 percent of bank accounts, and the median account
balance for this group is less than $350.
It is extremely challenging for people with low balances to
avoid being hit with an overdraft fee. The timing of when
debits and credits are posted to a checking account is opaque,
complicated, and out of the consumer's control, and in the
past, some banks have changed the order of certain transactions
so that they debit from largest to smallest to increase the
number of overdraft fees triggered.
Overdraft fees should not be used as high-cost forms of
credit, and should be eliminated or returned to an occasional
courtesy for covering a check or preauthorized electronic
payment. Banks should be allowed to impose no more than six
overdraft fees a year. Beyond that, they should cover
overdrafts through overdraft lines of credit with a reasonable
interest rate instead of a huge overdraft fee.
Unexpected and high fees like overdrafts are often cited as
a reason for a formerly-banked person to no longer have a bank
account. When a bank hits a negative balance with repeated
overdraft fees, it can make it impossible for the consumer to
recover, so the bank will close the account. When the account
is closed, the financial institution submits the customer's
name to a database that acts like a blacklist, which can
prevent the customer from opening a new account elsewhere for
several years.
Among people with checking accounts, Black and Latino
Americans are more likely than White Americans to incur
overdraft fees. It is wrong that a person who is struggling to
get by, gets exploited with a surprise $35 fee just because
they inadvertently overdrew their account while buying milk.
Some banks have made significant changes to their overdraft
programs, with a small number eliminating all overdraft fees,
others getting rid of their non-sufficient funds fees, and some
making more modest changes like 24-hour grace periods. While
this is positive for these banks' customers, these measures are
insufficient by themselves. We need financial regulators to
take decisive action to stop abusive overdraft fees at all
financial institutions and to prevent them from coming back.
Harmful overdraft practices remain a systemic problem that
policymakers should address. Unless fair, legally-binding rules
for overdrafts are established, abusive fees will remain. We
also need to look out for new fintech forms of overdraft fees,
like fees hidden as purportedly voluntary tips.
We urge Representatives to co-sponsor and support
Representative Maloney's Overdraft Protection Act, and Senators
to support Senator Booker's Stop Overdraft Profiteering Act.
These bills would cap the number of overdraft fees at one per
month, and six per year, while allowing additional overdrafts
to be covered through overdraft lines of credit.
We also urge the CFPB to use its rulemaking authority to
end abusive fee practices and to ensure that consumers are safe
at every bank and credit union.
We also urge the Federal financial regulators to use their
supervision and other authorities to address this problem. And
we urge Members of Congress to highlight the importance of the
actions taken by these regulators.
Thank you for inviting me to testify, and I will be happy
to answer your questions.
[The prepared statement of Ms. Crawford-Hicks can be found
on page 40 of the appendix.]
Chairman Perlmutter. Thank you, Ms. Crawford-Hicks, for
your testimony.
Mr. Kundert, you are now recognized for 5 minutes for your
testimony.
STATEMENT OF PAUL KUNDERT, PRESIDENT AND CEO, UNIVERSITY OF
WISCONSIN (UW) CREDIT UNION
Mr. Kundert. Good morning, Chairman Perlmutter, Ranking
Member Luetkemeyer, and members of the subcommittee. Thank you
for the opportunity to testify.
My name is Paul Kundert, and I am the president and CEO of
the University of Wisconsin Credit Union, and I am testifying
today on behalf of my organization.
UW Credit Union is a State-chartered, Federally-insured
financial institution. We have assets of $4.8 billion and are
among Wisconsin's top 10 financial depositories. We operate
primarily in the Madison and Milwaukee communities. We have
about 310,000 members, 875 employees, and 29 branch locations.
I have provided written testimony in advance of the
hearing, so I will be brief in my comments.
As a not-for-profit credit union, we believe our mission is
to improve the financial well-being of our members. This
mission led us to first introduce account overdraft services
more than 20 years ago, and this same mission led us to be
early among financial institutions in re-examining our
overdraft program and responding with changes to create a more-
equitable banking experience.
In 2001, when we introduced our overdraft program, we
viewed it as a way for members to avoid bounced checks. But
over the years, we observed an increase in the use of the
overdraft program, even though new online tools made it easier
for members to keep track of their account balances.
In 2009, when the Federal Reserve published an update to
Regulation E, it led us to re-examine our overdraft program.
About that time, too, consumer groups were questioning the
value of some overdraft programs and raising concerns that the
fees most often fell to those who could least afford them.
As a result, we made changes to our overdraft program in
2010, including implementing a de minimis grace zone of $10,
setting a limit of one fee per day, and we also affirmed that
we would not ask members to opt-in to pay overdraft fees
related to debit card transactions. We saw a significant
decline in overdraft fee income after these changes. Over the
next decade, we introduced additional types of accounts that
helped consumers avoid the possibility of overdrafts
altogether.
Then, in July 2021, we implemented a reduction in the
remaining overdraft fee to just $5. Here is what led us to
lower the fee. During 2020, overdraft programs were again
frequently the subject of financial industry news stories. We
also witnessed social unrest that prompted us to think more
deeply about racial equity and to consider business practices
from an equity point of view.
Also, we were influenced by research which showed that
lower-income households, particularly Black and Latinx
households, were more likely to use overdrafts.
We also reviewed our cost again in providing overdraft
services. In short, our review led us to believe that a $5
overdraft fee, limited to one per day, would be sustainable for
us.
It is important to confirm that none of the changes that we
have made have reduced the availability of overdraft funds to
our members.
My written testimony includes more details on all of this,
so I will just summarize and say that when prices are fair, we
believe consumers do benefit from access to the credit provided
by overdraft programs.
Thank you for the opportunity to testify today, and I look
forward to your questions.
[The prepared statement of Mr. Kundert can be found on page
47 of the appendix.]
Chairman Perlmutter. Thank you, Mr. Kundert, for your
testimony.
Mr. Sueiro, if I am making mincemeat of your name, I
apologize. Please state your name for the record, and you are
now recognized for 5 minutes.
STATEMENT OF SANTIAGO SUEIRO, SENIOR POLICY ANALYST, UNIDOSUS
Mr. Sueiro. Thank you, Mr. Chairman. Good morning, and
thank you for the invitation. I am Santiago Sueiro, senior
policy analyst at UnidosUS.
It is okay, people get my name wrong all the time.
UnidosUS, formerly the National Council of La Raza, is the
largest Hispanic civil rights and advocacy organization in the
United States. For more than 50 years, we have advanced
opportunities for Latinos. We also partner with nearly 300
affiliates from Colorado to Missouri, from small towns in Texas
and Florida to big cities on our coasts. Our affiliates are
local community organizations from across the country that
directly serve Latinos.
Latinos are in a precarious moment. The Federal
Government's response to the pandemic was critical to reducing
poverty and supporting low-income people. But as supports like
the Child Tax Credit expire, many are struggling to make ends
meet. Recent data shows that over the last 7 days, roughly 63
million people had difficulty covering expenses, and this
afflicts 38 percent of Latinos, compared to 23 percent of
Whites.
Yet, the work of Latinos is fueling the country's economic
recovery. Latinos start businesses at more than double the
overall rates and wield significant purchasing power. As such,
low-income people must not be burdened with unfair and
unnecessary fees. We are encouraged by recent announcements by
some banks that they are reducing or eliminating overdraft and
non-sufficient funds fees. These actions are, in part, the
result of renewed attention from regulators in addition to
pressure from consumers in a competitive market.
But because they are voluntary, they could be reversed if
conditions change. For this reason, we strongly encourage
policymakers to establish permanent guardrails to ensure a
competitive and fair marketplace for low-income people,
including Latinos.
We have three overarching observations that inform our work
on overdraft. First, most people who incur multiple overdraft
fees make less than $50,000 a year, and this group is
disproportionately comprised of Latinos. Second, high overdraft
and non-sufficient funds fees are a barrier to entry for
unbanked households. Third, a mix of careful regulations and
market-driven solutions can improve access to banking services,
resulting in a win-win situation for the industry and
consumers.
Overdraft fees, by nature, impact consumers when they can
least afford an additional cost. They are also predominantly a
fee charged to the lowest-income consumers. Consider that
research shows that Black and Latino households are far more
likely than White households to overdraw an account, and low-
to moderate-income households are nearly twice as likely as
higher-income households to overdraw an account.
Overdraft fees have implications for those outside of the
financial mainstream. As of 2019, roughly 7 million people were
unbanked, and 12 percent of Latinos were unbanked, compared to
2.5 percent of Whites. Cost is a major barrier to obtaining an
account. Some 34 percent of those who remain unbanked say they
do not have a bank account because of high fees, and 31 percent
say fees are too unpredictable.
Two policy change pathways could help make the marketplace
more fair and dynamic. First, excessive fees should be limited
by regulatory approaches, which could include limits on
multiple fees incurred for the same incident, caps on total
fees, reasonable grace periods to cure an overdraft, and, for
example, the Overdraft Protection Act would limit overdraft
fees significantly. The Consumer Financial Protection Bureau is
taking an interest with the recent request for information
focused on so-called, ``junk fees.''
Second, we should deepen support for institutions with
more-inclusive and affordable bank products. Community
Development Financial Institutions (CDFIs) and Minority
Depository Institutions (MDIs) offer such products, and we know
of many credit unions that go to great lengths to include
Latinos in their institutions, including offering low-cost
products. Congress should therefore consider increasing
appropriations funding for the Community Development Financial
Institution (CDFI) Fund program, allowing them to grow and
serve more low-income consumers.
Yet, the CDFI Fund needs complements to grow the field to
meaningful levels. The Advancing Technologies to Support
Inclusion Act would invest billions of dollars in CDFIs and
MDIs to upgrade their technology capabilities, which would
significantly improve their ability to compete with banks that
offer fintech products.
Finally, policymakers should incentivize banks to sign on
to Bank On national account standards, and banks should promote
these no-overdraft, low-cost accounts in underserved
communities.
Some of our financial institution friends said there should
be a race-to-the-top business strategy as the path forward for
the banking sector. We agree with the sentiment that investing
in low-income people by providing affordable and high-quality
products will allow communities and banks to grow together.
Thank you, and I look forward to your questions.
[The prepared statement of Mr. Sueiro can be found on page
52 of the appendix.]
Chairman Perlmutter. Thank you, Mr. Sueiro. I appreciate
your testimony.
Mr. Zywicki, you are now recognized for 5 minutes for your
testimony.
STATEMENT OF TODD ZYWICKI, GEORGE MASON UNIVERSITY FOUNDATION
PROFESSOR OF LAW, ANTONIN SCALIA LAW SCHOOL, GEORGE MASON
UNIVERSITY
Mr. Zywicki. Thank you, Chairman Perlmutter, Ranking Member
Luetkemeyer, and members of the subcommittee. I understand
consumers are frustrated by overdraft fees, and other bank
fees. Financial products for consumers today are extremely
complex for various reasons, and have a lot of price points.
But the point I hope you will take away from today is that
exasperation is not a substitute for sound economic analysis,
and I think this is an area in which unintended consequences of
bans on overdraft protections--substantive limits, price
controls and the like--could have some serious unintended
consequences.
I am going to talk about unintended consequences briefly on
three groups: first, those who use overdraft protection;
second, banks, and in particular small banks; and third, all
other consumers who don't use overdraft protection, and
particularly lower-income consumers, who I think would be most
adversely affected by unwise or extreme new limits on overdraft
protection.
First, who are these people who use overdraft protection? I
have detailed this in my written testimony, but I will just
give a brief overview here, which is, first, these are
individuals who have limited access to credit generally. The
CFPB did a study in 2017 which confirmed what had been
previously found, which is that the primary predictor of
whether somebody frequently overdrafts their account is their
credit score, and that people with low credit scores use
overdraft more frequently. It is not correlated with income and
other demographic characteristics.
There are a lot of low-income households in this country
who manage their financial affairs just fine, and never
overdraft their account, and I think that is important to keep
in mind.
People who use overdraft a lot are also people who do not
have access to credit cards, and if they do have access to
credit cards, they have much less credit access on their credit
cards. So, most consumers use credit cards for short-term
expenses, but they cannot.
The second thing to know about these people is that heavy
overdraft protection users use it for what could be called
necessities. Michael Flores and I did research where we looked
at Merchant Category Classification (MCC) codes, and we found
that overwhelmingly, the places where people overdraft are
grocery stores, gasoline pumps, and the like. Other studies
have found it is for things like utilities, rent, mortgage,
groceries, and the like.
The third thing is that, as I mentioned, there seems to be
very little correlation between heavy overdraft usage and
income. In fact, what we find is that higher-income households,
as measured by households that make a lot of deposits each
month, are actually more likely to be the households that
overdraft. What we see is that what causes overdraft, it
appears, are households that have high income and high
deposits, but also just a lot of deposit activity on their
account. They have a lot more debit card transactions and the
like, and lower average balances. So, we are talking about
people who just have a lot of income volatility, but they do
not appear to be lower income. They tend to be higher income,
or at least higher on deposits.
The fourth thing we know about people who use overdraft
protection a lot is that they monitor their accounts a lot more
closely. They understand that they are skating near the edge,
and when they overdraft, they typically understand that they
either are hoping that it will work out and a deposit will hit
before a withdrawal, or they know it will not. They check their
accounts regularly. They are much more active in checking their
accounts.
The second group this hits are small banks. Banks, as we
have heard, generate a lot of revenue from this. But what we
have found--and I can elaborate on this question if you would
like--is that small banks tend to be more dependent on
overdraft fees than large banks. Why? Because large, megabanks
have multiple lines of revenue, wealth advising services,
insurance, all these sorts of things. Small banks will have a
much more difficult time diversifying if they lose this stream
of revenue.
The third thing, and the one I want to close on, is to talk
about the impact on other consumers, consumers who don't use
overdraft protection, which is if we get rid of overdraft
protection and banks move to pick up revenues somewhere else,
what are we going to see? We will see higher bank fees, we will
see higher minimum monthly deposits as basically insurance
against overdrafting, and we will see a loss of access to free
checking, and this will impact low-income households the most.
A paper by Evans found that when the Fed changed its rules on
opting into overdraft protection, the percentage of free bank
accounts fell 11 percentage points in one year, which impacts
low-income consumers.
We also have the study by Federal Reserve Economists Brian
Melzer and Donald Morgan that I would refer you to, where they
found that when overdraft fees were essentially deregulated,
there was a decrease in returned check fees and an increase in
bank accounts by low-income households.
So, thank you for your time, and I look forward to
answering your questions.
[The prepared statement of Mr. Zywicki can be found on page
59 of the appendix.]
Chairman Perlmutter. Mr. Zywicki, thank you for your
testimony.
The Chair will now recognize the Chair of the full
Financial Services Committee, Chairwoman Waters, for 5 minutes
for her questions.
Chairwoman Waters. Thank you very much, Mr. Perlmutter.
I would like to address this question to Mr. Greer.
Mr. Greer, in his written testimony, states that elite
institutions use racism and discrimination as a tool to expand
their power and wealth, all while suppressing the economic
power of communities of color and other marginalized groups.
These elite institutions that control resources use that
control to change the rules of our economy in their favor,
which continues the cycle of profit.
You describe your work as basically liberation from the
oppression economy. Many of the large banks have announced
changes to their overdraft programs. However, these programs do
not all eliminate the use of overdraft fees and provide
different features. For instance, some large banks are now
offering new small-dollar loan products to their customers as
part of the changes.
What are the most important considerations when evaluating
and comparing these different programs that the banks are now
offering in lieu of more traditional high-cost overdraft fees?
Mr. Greer. Thank you, Madam Chairwoman, for that question.
It is so important. The perspective that you laid out is
precisely the assessment of the economy that we have. I think
there is a long history of the financial institutions in this
country oppressing people of color, whether that is in the
mortgage market, whether it is in retail banking, so on and so
forth, and we still see it today. We see examples of it today
in the news, it feels like almost monthly or weekly.
What I think is the most important thing to consider is as
financial institutions [inaudible], is recognizing and
understanding that they are navigating a very turbulent
economy, especially now in the time of COVID, more income
volatility, more volatility around the hours that they are able
to work, being pushed into the gig economy, and structuring
products and services to meet those needs for folks are things
to consider.
One thing that I will raise, and that Ms. Crawford-Hicks
raised in her testimony, is access to affordable credit, and I
would say access to affordable credit that is not predatory but
that will actually help people manage their finances and
actually build wealth, because what we know historically is
that these fees have become a substitute for folks who cannot
access affordable credit in financial institutions because of
discrimination in the credit markets.
So, what I would say is we can't look at these things in a
vacuum. It is very easy to say, well, if we do this, then this
will happen, or if we do this, then this. We have to look at
the whole picture and know that the financial institutions have
a responsibility to meet the full needs of communities that
they serve.
Chairwoman Waters. And do you believe that because of these
practices, the wealth gap can never be closed, in fact, if
these kinds of practices continue?
Mr. Greer. Absolutely, because what these fees are doing is
they are extracting resources out of the households of
communities of color that otherwise could be used to save
money, to put money down on a mortgage, on a house, to put
money down on a small business, to participate in the economy
in a way that builds wealth, but they are not able to do that
because fees like these and other things that financial
institutions do, that this committee and others have covered
over time, are just pulling and extracting and siphoning
resources out of communities that could be used to build
wealth.
Chairwoman Waters. The amount of money that you indicated
that has been paid by Black and Latino communities is
absolutely extraordinary. Do you stand by that?
Mr. Greer. It is what we found in the research in preparing
for this hearing.
Chairwoman Waters. I think about $40 billion, you indicated
in one instance here, with the Black community?
Mr. Greer. It was $800 million, and $1.1 billion in bank
fees in 2020.
Chairwoman Waters. Thank you very much.
Mr. Chairman, I yield back.
Chairman Perlmutter. The gentlelady yields back.
I now recognize the ranking member of the subcommittee, the
gentleman from Missouri, Mr. Luetkemeyer, for 5 minutes for his
questions.
Mr. Luetkemeyer. Thank you, Mr. Chairman.
Professor Zywicki, as someone who served as the Chair of
the CFPB's Task Force on Consumer Financial Law, do you think
the CFPB has the legal authority to set the prices for consumer
financial products?
Mr. Zywicki. I don't think they have the legal authority to
set the prices on financial products. And as we know, the Dodd-
Frank Act specifically says they cannot impose usury ceilings,
but I think that would be a general rule in terms of dictating
prices for financial services.
Mr. Luetkemeyer. So, why are they getting involved in this?
Mr. Zywicki. They have this theory of junk fees, and I
assume the theory must be something like, these are unfair,
deceptive, or abusive practices. It is not quite clear what
their authority is for it, but basically what we have had so
far is rhetoric.
Mr. Luetkemeyer. It is very concerning to me when you have
an agency like that basically create a new word. I have been
around for almost 50 years. I have never heard the words,
``junk fees.'' It is not in any financial services dictionary
anywhere. They created this word, and basically, what I think
you just said is they are trying to insinuate that there is
some sort of exploitative activity going on here, rather than
acknowledging that service charges are basically something that
is charged for a service that has been requested by the
customer, for which they pay a fee. They don't pay fees if they
don't access the service, right?
Mr. Zywicki. That is right. All of these fees are generated
by something people do. But the more general point, I think,
Congressman Luetkemeyer, is a sound one, which is, what is a
junk fee versus a risk-based fee, for example? If I go off to
Europe and incur a foreign transaction fee, should some poor
guy in rural Nebraska be forced to subsidize my foreign
transaction fee? If I overdraw my account, why should somebody
else have to pay for my overdrafts? If I pay my credit card
late, why all of a sudden is that a junk fee rather than
something that prices my risk and prevents other people from
having to subsidize my behavior? So, I think the junk fees
rhetoric covers a lot of serious economic questions.
Mr. Luetkemeyer. Over the last several months here, it has
really been concerning to me to see the activities of the CFPB
and the way they are going about their business. For instance,
they set up this strawman issue. The other day, they talked
about illegal repossessions, which is quite a--they created a
whole situation that doesn't exist, and say they have to
regulate that. They create service fees for financial
institutions as junk fees, so therefore we have to regulate
that. There is nothing there, and yet they try and create
something so they can make an excuse to regulate it, when you
just said they don't have the authority to do that. It is very
concerning, by the way, how they are going about their
business, how they are exploiting their lack of oversight to be
able to go about doing this. It is very, very concerning.
I am just curious, if there is no overdraft situation, what
happens to people if they can't have access to overdraft
services? What are they going to do when they have--40 percent
of people can't pay a $400 bill, and you wind up having to go
buy a new set of tires, and it costs $500?
Mr. Zywicki. That is right. Basically, they will either
have their payments declined, in which case they won't be able
to buy the goods or services they need--as I said,
overwhelmingly, it looks like people use overdraft for things
like groceries, utility bills, and the like.
The second thing they can do is try to go somewhere else.
For a lot of consumers, as we have already said, they don't
have access to credit cards, and what a lot of heavy users of
overdraft have said is that their next-best alternative is a
payday loan. So, they go without, or they have to go down the
street and get a payday loan in order to buy the tires, and it
is not clear to me how that makes them better off.
Mr. Luetkemeyer. You made a comment a minute ago that if
they don't charge a fee for this, the rest of the customers who
patronize that particular business are going to have to pay for
that person's ability to have a free loan through higher
service fees that they pay. Would that be a fair statement?
Mr. Zywicki. That is basic Economics 101.
Mr. Luetkemeyer. Because at the end of the day, there is a
certain amount of expense the business has if they have to
cover with their charges for their business operations,
whatever their business model is, that includes some fees to be
able to pay for the people who work for them to be able to do
that. To me, it is a simple way of operating. It is a business
model that has been there for years. There is nothing
exploitative about it if you understand how it operates. I was
in a business for a long, long time and I can tell you, people
call up and say, I wrote a check today, I will be in next week
to pick it up, please pay my check so I don't have an overdraft
fee or don't have a bad check fee and I can do business; they
are willing to pay the fee to be able to transact that piece of
business.
With that, thank you, Mr. Zywicki, for your testimony
today.
Mr. Chairman, I yield back.
Mr. Zywicki. Thank you.
Chairman Perlmutter. I thank the gentleman.
Now, I am going to recognize myself for 5 minutes.
In this subcommittee, I have said to people from time to
time that I think we have two responsibilities: consumer
protection; and financial institutions. One of them is to weed
out and stop sharp practices. I would say that is something
that as a bankruptcy lawyer, I heard a lot about. Bankers and
bankruptcy lawyers, we heard about sharp practices that take
advantage of everyday Americans and put them behind the eight
ball, where they really have trouble exiting. The other is to
make sure that the financial institution remains solvent and
strong, and those are not incompatible. Those things work
together.
So, I am going to start with you, Mr. Kundert, if I may. I
want to ask you about some of the consumer protections your
credit union has implemented to your overdraft product.
Beginning back in 2010, the University of Wisconsin, (UW)
Credit Union implemented a de minimis overdraft buffer,
published a plain-language description of the product, and made
other changes to make the product more consumer-friendly. As
you mentioned, you also recently cut your overdraft fee from
$30 to $5. Many of these steps your credit union has taken are
emblematic of the changes many of my colleagues and I would
like to see in the market overall. I think a lot of other
financial institutions are taking a close look at their
overdraft programs, and hopefully we will see continuing
improvements in this area.
What has been the most challenging part of improving your
overdraft program?
Mr. Kundert. Thank you, Mr. Chairman. The most challenging
part is adapting to not having the revenue that the programs
previously provided us. The revenue from overdraft programs,
especially those that include debit card transactions, can be
pretty significant to a financial institution. So, we
voluntarily made these changes and made them, as you mentioned,
starting 10 years ago, so we have had time to adapt our
organization to not depend on that overdraft income.
I think operationally, it hasn't been as difficult to
implement changes as it is just to adjust the business model
where that revenue isn't a part of it.
Chairman Perlmutter. How have your customers reacted to the
changes that you have made over this period?
Mr. Kundert. Honestly, they have responded quite quietly.
We didn't have a lot of complaints about practices before 2010,
or even since. Obviously, people have benefited from the more
affordable cost of the program, and that has been a positive.
We enjoy very high member satisfaction levels overall. But over
the years. we have received very little feedback one way or the
other on these programs. But we believe in principled decisions
and don't necessarily make them based on public outcry or
complaints.
Chairman Perlmutter. You said these provide a significant
revenue stream. I heard Mr. Greer at the beginning of his
testimony talk about the $34 charge paid back in 3 days on a
cup of coffee or whatever it is, at a 17,000 annual percentage
rate (APR).
So, Mr. Greer, do you think these revenues that people get
stuck in, is it a revenue stream that the banks are becoming
dependent upon, I guess is what I would ask you? Or a bank, any
banks?
Mr. Greer. Yes. ``Dependent upon,'' I think is--I think it
is quite clear that it is a significant portion of their
revenue that is coming in. Now, dependency on that revenue to
me doesn't justify the extraction that it is taking from
households, particularly households of color. Members of
Congress have to understand the tradeoffs of that. The
financial instability in the households that these fees are
causing households to me wouldn't be commensurate with the
adjustments that financial institutions would have to make in
order to forego some of the revenue that they would lose by
eliminating these fees.
Again, I think the tradeoff for families is they are much
less able to stomach the impact of these fees than the bank
would be for cushioning the impact of the loss of revenue.
Chairman Perlmutter. Thank you.
My time is about to expire, so I will yield back, and
recognize the gentleman from Florida, Mr. Posey, for 5 minutes.
Mr. Posey. Thank you very much, Chairman Perlmutter.
Professor Zywicki, is there any way to be charged an
overdraft fee if you don't write bad checks?
Mr. Zywicki. Not that I am aware of.
Mr. Posey. If there was no fee to cover bad checks, who
would have the burden of making up lost revenue and
administrative costs?
Mr. Zywicki. That is a great point, Congressman Posey. You
have to keep in mind that the overwhelming majority of
Americans never or rarely overdraft their account. So, most
people don't do this. But if we have a situation in which
people are writing bad checks that have to be cashed off or
payments that are made that have to be cashed off, an overdraft
line of credit might be $300, $400, $500, and if people don't
have to pay for that and that ends up getting written off,
somebody else has to bear that cost, which means that other 80
percent of households presumably who aren't really using
overdraft very often.
Mr. Posey. When we are talking about the title of this
hearing, ``The End of Overdraft Fees? Examining the Movement to
Eliminate the Fees Costing Consumers Billions,'' if we do that,
we shift the burden of responsibility from people who write bad
checks to the backs of people who don't write bad checks,
correct?
Mr. Zywicki. That is right, the rest of us have to pay for
it. And what really bothers me about it, what I am most
concerned about, Congressman Posey, is the impact this would
have on all consumers, which is to say one way of keeping
people from writing bad checks is, for example, requiring them
to hold higher minimum balances in their accounts so the
payments are more likely to clear. Who is that going to hurt?
That is going to hurt low-income consumers. You could charge
bank fees for everybody, monthly fees, in order to provide
this, ``free,'' service. Who is that going to affect? It most
likely will affect low-income consumers because they are not
going to be able to get the minimum balances necessary to
maintain free checking and the like.
So, there is no free lunch here. There is no free lunch,
unfortunately, for when you overdraw your account. Somebody has
to pay for it.
Mr. Posey. Historically, we only subsidize things that we
want to encourage, and I wouldn't think we would want to
encourage writing bad checks, but it is almost comical when you
stop and think about it, that the management of an organization
that is $30 trillion in debt, with no plan whatsoever to ever
repay that money, just continue to pay interest and burden
future generations, is trying to tell banks and credit unions
and other lenders how they should run their business. That
almost doesn't pass the straight-face test. I have a real
problem with that.
Would it be reasonable and beneficial for banks to
characterize overdraft fees to become a short-term line of
credit with transparent limits on the amount of available
credit and the prices of that credit?
Mr. Zywicki. What I think would be a useful way, a more
productive way to think about this, Congressman Posey, and I
feel very strongly about this, and we talked about this in our
CFPB task force report--I think the answer to this is more
competition, which is it is regrettable that if you can't get
an overdraft transaction, you have to go get a payday loan. I
think the answer is to open up things like fintech, greater
chartering of credit unions, more access to different sorts of
banks, like Walmart being given a banking charter. I think that
earned wage access, as we talked about, direct deposit advance.
And I also think a very important thing that was mentioned
in some of the background materials is it is time for the Fed
to get its act together on faster payments. Somebody needs to
get this faster payments problem solved. The rest of the world
knows how to do faster payments. Why can't we do faster
payments so that it takes 3 or 4 days for your paycheck to
clear in a bank? I don't know whether it is the Fed or whether
it is the clearinghouse or somebody, but there are a lot of
things that could be done to promote competition and promote
access, I think, without going down this path of banning
products, price controls, and things that are going to have
terrible unintended consequences for people.
Mr. Posey. Thank you.
My time is about to expire, so I yield back, Mr. Chairman.
Chairman Perlmutter. The gentleman yields back.
The Chair now recognizes the gentleman from Texas, Mr.
Green, who is also the Chair of our Subcommittee on Oversight
and Investigations. You are now recognized for 5 minutes for
your questions.
Mr. Green. Thank you, Mr. Chairman.
Mr. Chairman, I am grateful for this hearing, and I
especially want to thank you and the Chair of the Full
Committee. I am just amazed at how this hearing has unearthed
facts that are so disturbing.
And I want to mention this: the Chair of the Full
Committee, if I may, the Honorable Maxine Waters, when it comes
to housing the homeless and consumer protection, nobody is in
front of her in that line of persons who desire to do so. So, I
am grateful to you, Madam Chairwoman. It is an honor to serve
under your leadership.
With reference to the comment about no free lunch, let's
talk to Mr. Kundert. You have been without these overdraft fees
for some time now. Are you at risk of going out of business?
Mr. Kundert. No. I am happy to report that we are doing
very well.
Mr. Green. How do you respond to a comment about no free
lunch when it comes to doing something that obviously benefits
your clientele?
Mr. Kundert. We did not eliminate the overdraft fee
entirely. Our action was to change the likelihood that it would
be imposed, make sure it wouldn't be imposed more than once a
day, and to study our actual costs to make sure the fee we were
charging was proportional and appropriate for the service we
were providing.
We do provide our accountholders between $200 and $600 of
liquidity through these programs, so to be sustainable, we
believed that we needed to charge something. It wasn't possible
for us, or wise I should say, we didn't think, to charge
nothing for the fee, because we think there should be a greater
cost to receiving an advance from the credit union than not
receiving one, and I think that goes to some of the comments
that have been made about fairness to all of the members that
we serve.
But we are not serving all our members well, we think, to
disproportionately profit from one segment of our membership
simply to benefit another. We do think that we need to be
diligent in monitoring the levels of income that we receive
from the various products we have.
Mr. Green. I am grateful that you have given it some
consideration, to be very candid with you. I have one more
question for you and then I will have to move on. In doing
this, how much less are you charging the persons that you are
referencing? What was the fee initially, and what is it now?
Mr. Kundert. We made substantial changes to the likelihood
you would incur a fee, and no more than one, 10 years ago. But
last year we reduced the fee from $30 to $5. We were
comfortable with $30 in 2010 because it was, at the time, sort
of considered the competitive market rate for an overdraft. Our
focus was to make sure you wouldn't incur that from a debit
card transaction. It would be purely from a check transaction
or an ACH debit. But last year, we reduced the fee after more
examination of the program.
Mr. Green. And you are maintaining your business model and
doing well?
Mr. Kundert. We are. Thank you.
Mr. Green. Thank you.
Mr. Greer, let me go to you rather quickly. You indicated
that the people who incurred these fees usually would have $24
or less in their overdraft, and that it would be repaid in
about 3 days. I think you said that the interest rate annually
would compute to about 17,000 percent. Correct my mistake,
because I think this is great information for me for future
reference.
Mr. Greer. No, that is correct, Congressman.
Mr. Green. And $24 or less. What would the typical amount
of the overdraft fee be for this $24 or less?
Mr. Greer. Anywhere underneath that $24. So, you are
talking about routine kinds of purchases at the grocery store,
for example, a carton of milk.
Mr. Green. I guess what I am asking is, what was the fee
that the bank would charge for that?
Mr. Greer. They would charge $34 on, say, a $5 overdraft.
Mr. Green. Thirty-four dollars on a $5 overdraft.
Mr. Greer. Yes.
Mr. Green. Okay.
I thank you, Mr. Chairman, and I yield back.
Chairman Perlmutter. The gentleman yields back.
The Chair now recognizes the gentleman from Kentucky, Mr.
Barr, for 5 minutes.
Mr. Barr. Thank you, Mr. Chairman, and thanks to our
witnesses for their testimony today.
As the discussion has progressed, I notice a theme
continues to come up, and that is the benefit of short-term
liquidity for consumers provided by these overdraft-eligible
accounts.
Ahead of this hearing, I asked many of my constituents,
Kentuckians, for some anecdotes about their experiences with
bank accounts and overdraft fees, and I got a whole lot of
feedback, and one of them I just have to share.
They were a couple of brothers, and they were horse
traders; Kentucky is synonymous with horses. And these guys
would buy Western performance horses for cutting and rating,
and they bought them for about $3,000, and they sold them for
$5,000. They had short-term liquidity needs, and they sometimes
paid the bank $1,000 in overdraft fees and negative balance
fees.
But they wanted to do it. They knew that they were going to
have to do it. They didn't qualify for a line of credit, so
they wanted to do this because they had no problem paying a $30
overdraft fee to buy a horse on which they would then make
$2,000. They knew about this product, they liked the product,
and the bank had a problem with it, not because the bank didn't
believe that these folks were going to pay them back, but
because the regulators had a problem with it. That is why the
bank had a problem with the overdraft.
Another great story from a Kentuckian. It is one thing to
speak about these fees in the abstract, but it is a totally
different thing to hear about what happens in reality, and to
hear it directly. A young mother, her husband was deployed in
the Army, and her car broke down. She had no way to pay for the
car repair, but forgot that she didn't have sufficient funds in
her checking account. The overdraft protection on that account
allowed her to address her emergency, and she relayed that the
fee she paid was worth the convenience in the circumstance. And
I have heard many other stories similar to this one.
Professor Zywicki, in a circumstance like the one I just
described, what options would be available to that young mother
whose husband was deployed overseas? What alternatives would
she have if accounts with overdraft protection were banned?
What would be the alternative for her as she faced that short-
term, cash-strapped need?
Mr. Zywicki. What we know is that if you asked most people,
including people in this room, they would just use a credit
card, right? That is what credit cards are for. But people who
use overdraft say, ``We don't have credit cards.''
I think we need to understand that according to the CFPB,
people who overdraft their accounts frequently have a credit
score of 563, which is deep sub-prime. So when we are talking
about overdrafting, extending $300 or $500 of credit to
someone, these are accounts that go bad. They are overdraft
accounts that go bad, which is why you charge a fee on them,
and these are people who are not going to get a credit card.
So for this young woman, presumably, if she had a credit
card, she would have used it. She didn't, and so her
alternative is probably a payday loan, which is the best she is
going to do at that point, or going without.
Mr. Barr. And to that point, this woman saw her banker at a
grocery store and went up and thanked the banker for the
convenience that overdraft protection provided.
Professor Zywicki, can you describe the requirements for
banks under Regulation E with respect to overdraft fees and the
transparency and protections that those rules already provide
to customers?
Mr. Zywicki. There are already a lot of disclosures that
are required. With respect to point-of-sale and ATM overdraft
fees, we know they changed the rules so it is opt in, so
consumers actually have to opt into that. And unsurprisingly,
what we see is that consumers who use overdraft protection a
lot are a lot more likely to opt in when that was passed
because they have the greatest need for the product.
Mr. Barr. In my final minute, I want to focus on another
point that you made, about the ability of community banks,
small banks, to handle overregulation of overdraft versus large
banks. It is wonderful that we heard from one of our witnesses,
Mr. Kundert, about his institution's ability to reduce those
fees, and that is the great thing about a competitive
marketplace. And presumably because of that move, maybe his
institution is able to attract more customers. That is his
choice, and that is what the free market and competition does.
But can you compare the relative ability of large banks and
small banks to absorb the costs of overdraft protection if fees
are further curtailed or prohibited?
Mr. Zywicki. Yes. I think it is great that banks are
innovating on this, they are competing. If large banks want to
be more generous on overdrafts, that is great. Let a thousand
flowers bloom. But the reality is that larger banks have a lot
more places from which they can generate fees. Small banks have
continued to be able to be competitive because they offer no-
annual-fee bank accounts. Large banks have generally moved away
from that.
Chairman Perlmutter. Mr. Zywicki, his time has expired.
Thank you.
With your anecdotes, Mr. Barr, you reminded me that my
daughters find that their cup of coffee at Starbucks has
overdrawn them by $2, and they get charged $35 on their
overdraft. So, they are all over the map on this thing.
I now recognize the gentleman from California, Mr. Vargas,
for 5 minutes.
Mr. Vargas. Thank you very much, Mr. Chairman. I appreciate
this hearing very much, and I want to also thank Ranking Member
Luetkemeyer.
Dr. Zywicki, you have said a few things here today that to
me sound very counterintuitive, so I want to make sure that I
understood what you said and give you an opportunity to clarify
them for me if I am incorrect.
You said this: Who are the people that use overdraft? You
said it is not correlated to poverty. Higher-income families
use overdraft more than lower-income families, and they use it
for groceries and utilities.
That sounds very counterintuitive to me. I don't believe we
ever used overdraft, an upper middle-class family. I think you
also said the great majority of Americans never use overdraft.
That seems to me, to be completely counterintuitive. Could you
explain that to me?
Mr. Zywicki. Sure, I would be happy to. For example, on the
question about income, if you look at the CFPB's 2017 report on
frequent overdrafters, what we find is that when you look at
monthly deposits, very-frequent overdrafters who overdraft more
than 20 times a year have monthly deposits of $2,554. People
who infrequently overdraft, one to three times a month, have
$1,726 per month, so $800 more per month, and it goes down from
the high of $20 to $10 and down. It goes from $2,500 down to
$1,700 linearly.
What we also see is that people in that category have very
low credit scores, very low credit available on their credit
cards, and much higher levels of point-of-sale debit card
transactions, twice as many as the people who have lower income
and overdraft less frequently.
What seems to be driving overdraft protection for a lot of
these people is they simply have a lot of money flowing through
their accounts and things get out of whack, right? So it would
not be, unfortunately, surprising if their--
Mr. Vargas. Dr. Zywicki, I am going to interrupt you for a
second, because there was testimony that other people have
spoken of, about people of color especially overdrafting. It
doesn't seem to jibe with what you are saying at all, just to
be frank. This seems to me a little bit like the old lawyers
who got up there for the tobacco companies and said no, no,
tobacco, there is no health problem here.
Would someone else like to answer these questions to refute
or contest what Dr. Zywicki has said, any of the other
witnesses?
Mr. Sueiro. Sure. This is Santiago with Unidos. I believe
in the same report we have been looking at, that 9 percent of
consumers account for 80 percent of all overdraft fees. In that
report, if you look at the 9 percent of consumers, 7 out of 10
of them earn less than $50,000 per year. So if you are looking
at it in terms of income, a majority of them are relatively
lower income, rather than looking at it in terms of deposit
amounts.
Mr. Vargas. It seems ridiculous to me to believe that it is
mostly wealthy families who overdraft. Maybe it is not, but it
seems ridiculous to me, especially when you see so many people
of color, who are normally not wealthy, paying so much in
overdraft fees.
Would anyone else who would like to comment on that?
Ms. Crawford-Hicks. This is Elyse Crawford-Hicks from
Americans for Financial Reform. I particularly agree that it
does sound ridiculous that high-income families are using
overdraft protection when low-income families do not own a lot
of the wealth in this country. So quite naturally, the 9
percent of accounts that hold $350 or less, that are using
overdraft protection the most, do seem to belong to the low-
income people in the country.
Mr. Vargas. That seems obvious to me. But it could be
right, I don't know. I think more should be done on that
because it sounds ridiculous, that the wealthy families are the
ones that pay the overdraft and the poor do not, that it
doesn't correlate to poverty. That sounds utterly ridiculous.
It sounds like that old commercial for the tobacco companies.
But again, my time has run out. I appreciate this hearing
very much. Thank you.
Chairman Perlmutter. The gentleman's time has expired.
The gentleman from Texas, Mr. Williams, is now recognized
for 5 minutes for his questions.
Mr. Williams of Texas. Thank you, Mr. Chairman.
Mr. Zywicki, do you want to quickly respond to any of those
accusations?
Mr. Zywicki. Sure. This is CFPB data. This is a CFPB study.
Michael Flores did a study that found the same thing. People
with high overdraft--and again, most households don't overdraft
or overdraft rarely, right? We are talking about high
overdrafters. The CFPB, and Michael Flores' study, found the
same thing, which is that what correlates with people is that
they have high deposits, high transactions, and low average
balances.
Mr. Williams of Texas. We know the CFPB is always right, so
thank you for that.
Mr. Zywicki. Compared to the cigarette industry.
Mr. Williams of Texas. It is funny that we are having this
hearing highlighting a phenomenon that the private sector--and
I am a private sector guy, I am a small business owner--is
already taking care of. There is a thing called competition
that a lot of people don't understand, but it drives the
financial industry to lower or get rid of overdraft fees
entirely. Customers tell people what to do, tell businesses
what to do. This is not happening because of government
mandates but businesses who are competing for customers.
It started with some fintech companies like Chime, who got
rid of these fees almost 5 years ago, and a few years later,
more traditional banks like Ally changed their overdraft
policy, in their opinion to better serve their customers. And
most importantly, one of the largest banks in the country,
Citibank, got rid of these fees as well.
So, the market is taking care of the issue without
government intervention, and we do not need more rules from
Washington mandating that the entire industry move in this
direction, because I know when I opened up my first checking
account, I agreed to write checks and have money in the bank
before the check cleared. Pretty simple.
So, Professor Zywicki, in what ways do you think banks
would recoup some of their lost revenues if overdraft fees were
suddenly banned across-the-board?
Mr. Zywicki. Let me again emphasize that I think it is
great that there are different models of competition. Credit
unions obviously are member organizations. They can have a
different model from a bank that is kind of open to all comers.
But I think what we would probably see is a reduction of
free checking, and we would see higher required monthly minimum
balances. This is what the research found, that there were
restrictions. And we would see higher bank fees, like higher
monthly fees.
Mr. Williams of Texas. So if we legislate away overdraft
fees, some private sector participants will simply block these
transactions from going through at the time of the sale, and
this will leave consumers--again, the very people we want to
help, whom we sometimes end up hurting--with fewer options, and
they are left in a pinch and do not have sufficient funds in
their account.
We saw after Dodd-Frank, when the government came in with a
heavy-handed regulatory approach, debit card rewards and free
checking accounts suddenly left the market. These are tradeoffs
to all of these policies we enact in this committee, and we
should not look at outright bans on certain products that
provide a necessary service to customers.
In Texas, we have a saying that a deal is a deal. Professor
Zywicki, what are some ways we could expand consumers' options
in the small-dollar credit space instead of this blanket big-
government ban?
Mr. Zywicki. I think that is the best way to think about
this, Congressman Williams, that first, I think the Durbin
Amendment example is a very bright cautionary tale of how this
happens. So, I would advise you to look at that.
But as I mentioned, I think things like fintech, I think
greater chartering of industrial loan banks such as Walmart
potentially getting in, earned wage access, direct deposit
advance products, all these sorts of things--more competition
is the answer for these consumers, more choice, rather than
putting them in this bucket where they have to either get an
overdraft or a payday loan, which is a terrible situation to be
in, which is where a lot of these people find themselves
because there aren't enough alternatives.
Mr. Williams of Texas. Main Street America has been
hammered, and I am Main Street America. I am in the car
business. Main Street has been hammered with new regulations
during President Biden's first year in office, and one study
estimated the true cost to be around $202 billion of
regulations, and 130 million manhours to deal with these
regulations, and it is a cost that forces businesses to hire
compliance people rather than salespeople to comply with these
government mandates.
This means businesses are forced to hire more compliance
officers who will be nothing but a drag on a company's bottom
line because they generate nothing. I am in a business that is
totally commission. If you don't sell something, you don't eat.
And to hire a compliance officer, does nothing for me; it does
not help.
So quickly, I know you have studied this topic extensively,
so can you give us your view of regulatory optimization? What
is regulatory optimization?
Mr. Zywicki. That is a great point, which is this is one of
the big reasons why this hits small banks so heavily, which is
every time you enter a new business, a new line of revenue, you
also have new compliance costs that go along with it. So if you
are going to start selling insurance or something, for small
banks, this is very difficult.
Mr. Williams of Texas. If you have a way to put a
compliance officer on commission, let me know.
I yield back.
Chairman Perlmutter. The gentleman's time has expired.
The gentleman from New York, Mr. Torres, is now recognized
for 5 minutes for his questions.
Mr. Torres. Thank you, Mr. Chairman.
It has become increasingly fashionable for banks and
corporations to preach the gospel of equity and inclusion, but
the banking industry should do some soul searching and ask
itself: What are we to make of the racial inequity and
exclusion brought on by overdraft fees? The imposition of
overdraft fees at the expense of the poorest people of color in
places like the South Bronx flatly contradicts every notion of
equity and inclusion. Poverty is expensive in America, and the
prohibitive expense of poverty in America can be measured, in
part, by overdraft fees.
The overdraft fee for a single transaction can be as high
as $36, which is 5 times higher than the Federal minimum wage.
In 2019, overdraft and non-sufficient funds fees generated an
historic high of more than $15 billion in revenue for the
banking industry. According to the CFPB, overdraft and NSF fees
make up two-thirds of revenues generated by fees. Overdraft
fees are so common that 1 in 11 Americans pay more than $350 a
year. And even more troubling, less than 8 percent of customers
pay a staggering 80 percent of the overdraft fees.
And is it fair to say, Ms. Crawford-Hicks, that those
customers are disproportionately lower-income people of color?
Ms. Crawford-Hicks. It is fair to say that the overdrafts
are affecting people of color disproportionately. Again, in my
testimony, we are looking at 80 percent of overdraft fees from
9 percent of those accounts.
And going back to my colleague, Mr. Zywicki's, point about
overdraft fees not affecting low-income people, again I state
that people of color do not own the most wealth in this
country. So if 80 percent of overdraft fees are coming from 9
percent of the accounts, it must be coming disproportionately
from people of color.
Mr. Torres. According to the Pew Charitable Trust, in 2016,
7 in 10 customers who repeatedly overdrafted earned less than
$50,000 a year, which is hardly high income in a place like
Washington, D.C., or New York City. Nearly 25 percent of the
repeat overdrafters pay fees equal to one week or more of
wages. Let that sink in for a moment. There are 52 weeks in a
year, and there are wage earners for whom a whole week of
wages, or several weeks of wages, are devoured by overdraft
fees alone.
Is it fair to say, Mr. Sueiro, that those wage earners are
more likely to face barriers to accessing affordable and
reliable credit?
Mr. Sueiro. Yes. One of the things that we see in the FDIC
report from 2019 is that three answers that unbanked people
gave were associated with cost when it came to barriers to
gaining entry into the financial system.
Another report from the Center for Responsible Lending
found that a million people, roughly, were left out of the
banking system as a result of overdraft fees specifically. And
then, we have seen a lot of research showing that the high cost
of banking generally is an impediment for low-income people and
Latinos gaining access to the financial system.
Mr. Torres. So, it is fair to say that when it comes to
credit, there is a tale of two Americas. Those with higher
incomes have access to affordable and reliable credit, and
those with lower incomes in places like the South Bronx often
have no choice but to pursue de facto credit in the form of an
overdraft, which again carries a fee that is 5 times the
Federal minimum wage.
Ms. Crawford-Hicks, you spoke about the closing of accounts
leading to the blacklisting of the lowest-income Americans. Can
you elaborate?
Ms. Crawford-Hicks. Yes. Overdraft fees, and when you are
put in a cycle of overdraft fees, just like my husband and I
were before I was able to find a job in California, it
contributes to the cycle of when you are getting paid, most of
your check is going to those overdraft fees. So, it does lead
to people being unbanked, because if you overdraft multiple
times, the bank will want to close the account, and because of
these fees, people do not trust banks and decide to stay
unbanked.
Mr. Torres. Mr. Zywicki, I suspect we are going to disagree
on this question, but there are banks for which the majority of
their revenues come from overdraft fees. If you are a bank for
which the majority of your profitability on which your very
existence depends comes from overdraft fees, does that strike
you as a healthy business model for a bank?
Mr. Zywicki. Yes, I am familiar; I have seen these reports
on a couple of small banks in particular that do this. One that
particularly concerns me is that there does seem to be some
evidence that ever since the Military Lending Act went into
effect, thereby restricting access of the military to a lot of
other forms of credit, they have ended up using a lot of
overdraft.
Chairman Perlmutter. Mr. Zywicki, I am sorry that I keep
interrupting you, but everybody seems to end on you, and I have
to stop you, so I apologize for that. There will be an
opportunity for the Members to submit written questions to all
of you to follow up on this kind of thing.
The gentleman from Georgia, Mr. Loudermilk, is now
recognized for 5 minutes.
Mr. Loudermilk. Thank you, Mr. Chairman. This is a very
intriguing subject, and as someone who is very familiar with
overdraft fees--especially in my younger years in the military,
when I paid quite a few of those--this is an interesting
subject.
But I do want to quickly go back to some of the discussion
we have had about who is paying the overdraft fees. I will ask
Mr. Greer or Ms. Crawford-Hicks, whomever can answer this, I
have heard the numbers we are talking about, who is paying the
most fees. Are there instances that banks that are in minority
communities--because some of the information I am getting kind
of sounds this way. Are banks that are in minority communities
charging a higher fee per overdraft than banks not in minority
communities? Is that what we are saying? Is that why minority
communities are paying more in overdraft, because they are
being charged more? Whomever can answer that question.
Ms. Crawford-Hicks. No, that is not what we are saying.
Overdraft fees seem to be pretty standard across-the-board,
except when you are looking at credit unions.
Mr. Loudermilk. So, what you are saying is that minority
communities are doing more overdrafts than non-minority
communities. Is that what we are getting at?
Ms. Crawford-Hicks. Minority communities are usually low-
income communities, making $50,000 or less a year. And when you
are taking care of a family and you are going to the grocery
store and inadvertently overdrafting your account, yes, there
is inflation.
Mr. Loudermilk. Okay. Most of my life, before I got into
Congress, I made $50,000 a year or less. I never considered
myself poor in that aspect. And as far as overdraft, after I
learned a great lesson from that--that lesson was I went to a
grocery store one time, had a cart full of groceries that my
family needed, and the grocery store wouldn't accept my check
because I had unpaid overdraft fees, which, to Mr. Zywicki's
point, is what a lot of what people are using it for. But the
issue I had was the expenditures I made at the beginning of the
month, because while my colleagues in the military were
bringing their lunch to work, I was eating out, I was going out
with my family. So, it was a decision I was making.
In fact, I started listening to Zig Ziglar. I don't know if
you remember that. Zig Ziglar had lost a whole lot of weight,
and he said that he finally decided that he was choosing to be
overweight, because he never accidentally ate a double
cheeseburger. Now, what that told me is that I was making
particular choices. As one of my colleagues, Mr. Barr, said,
there are people who are making those choices, for instance,
the horse traders. They are paying a lot less in an overdraft
fee than they would for a line of credit, right?
So, there is a choice function there. I am not saying that
they are having to make this choice. Yes, there are some
problems with this, and we do have to address it one way or the
other, because at the rate this Administration is driving up
inflation, I imagine this is going to get worse before it gets
better.
I do like some of the things that I heard Mr. Kundert say
that they have done in their credit union, but I do have one
question to ask there. You said this did cost you some revenue
when you made your changes to overdraft fees. How did you make
up for that revenue? Did you just take that as a loss? Did you
raise fees in other areas, or did you open up more lines of
revenue coming in? How did you make up for that loss?
Mr. Kundert. We primarily made up for it over time by
building more efficiency into the organization. When we
benchmark our operating costs to other similar size
institutions, we are often in the 90th percentile for operating
expense efficiency per household. That took some time and some
focus, but that is primarily how we did it, because we have to
compete on price on all of the other consumer products we
offer. We can't be out of line in market--
Mr. Loudermilk. So, you cut costs in other areas. Okay,
that answers that question.
As I am quickly running out of time, Mr. Zywicki, is it
economically sound to expect a private business to provide a
service it can't afford? What is going to happen if we force
banks--and I know some banks that exclusively operate in
minority communities. If we force those banks to make changes
they can't afford, and they can't cut costs like the credit
union has done, what is the result of that?
Mr. Zywicki. The first thing that will happen is they will
have to find fees somewhere else. The second thing is that
people are probably going to overdraft more, which probably
means your losses are going to go up as well.
Mr. Loudermilk. And that does put people in a spiral. I
have been in that spiral, but it was a spiral I knew I
inevitably chose to be in because people who were in the same
income bracket I was in were not having the same problem I was
having. I am not saying that is in every case, but we do have
to consider that when we are looking at making national
changes.
And I yield back the remaining time I no longer have, Mr.
Chairman.
Chairman Perlmutter. The gentleman yields back the time he
doesn't have.
The gentlelady from Massachusetts, who is also the Vice
Chair of this subcommittee, Ms. Pressley, is now recognized for
5 minutes.
Ms. Pressley. Thank you, Chairman Perlmutter.
Being poor in America is expensive. Millions of families
and workers are living paycheck to paycheck, struggling to make
ends meet due to unlivable wages, a lack of affordable health
care, the absence of paid leave, and many other policies which
are pushing families farther to the margins. And yet these are
the very same people, the very same families who, at their most
financially vulnerable moments, are charged overdraft fees by
banks.
Ms. Crawford-Hicks, some large banks have voluntarily
reduced or eliminated overdraft fees, but many have not.
According to the Brookings Institution, after 2021, 6 banks
relied on these fees for more than half of their net income,
and 3 of those banks relied on them for 100 percent of their
profits.
Is it fair to say that this business model is based on
making poverty a sustainably profitable enterprise?
Ms. Crawford-Hicks. Thank you, Representative Pressley, for
that question. I keep going back to this point because I want
to drive it in. I wholeheartedly agree that this business model
is based on making poverty a sustainably profitable enterprise.
As I stated in my testimony, nearly 80 percent of overdraft
revenue comes from 9 percent of accounts, with median account
balances of $350 or less, making it very expensive to be poor.
And just going back to the point that was made previously, it
is not about choices; it is about access to resources.
Ms. Pressley. Thank you, Ms. Crawford-Hicks, and certainly
no apologies needed here for being repetitive. As tired as
people might be of hearing those sobering data points, imagine
how exhausting it is to live it.
Can we really trust banks that rely on overdraft fees for a
majority of their income, their net income, to voluntarily
reform? Or do you agree that we need to ban overdraft and other
junk fees for good?
Ms. Crawford-Hicks. I am extremely leery of financial
institutions that in 2020 made billions of dollars in overdraft
fees at one of the most vulnerable times in American history,
to voluntarily cease profiting from these fees. Using
regulatory and legislative intervention is imperative to
protect those living on the margins from being preyed upon by
financial institutions, and just to level the playing field for
those who are being taken advantage of by this.
Ms. Pressley. Thank you, Ms. Crawford-Hicks. While I was
calling for, to your point, building upon that, while myself
and others were calling for overdraft fees to be abolished last
year, big banks actually raked in billions of dollars of
profits from those fees. So, can you tell us how big banks
capitalize off of people facing great and unprecedented
economic hardship during this pandemic?
Ms. Crawford-Hicks. Representative Pressley, speaking of
sobering data points, according to The American Prospect,
JPMorgan Chase, for example, made $1.5 billion in revenue on
overdraft alone in 2020. And according to the recent findings
from the FDIC, during that same period, Bank of America made
$1.1 billion in profits, and Wells Fargo made $1.3 billion in
profits. And in the final 3 months of 2020, when the pandemic
was at its worst and deadliest, all 3 of those banks made $300
million just in overdraft fees alone. So, while Americans
suffered through the worst wave of the worst public health
crisis in 100 years, and unemployment was skyrocketing, the
country's biggest banks were gouging poor Americans for
billions of dollars in punitive fees.
Ms. Pressley. Thank you, Ms. Crawford-Hicks.
It is clear that because it is profitable, it certainly is
not incentivizing for them to do this on their own. So, how can
we reform such an abusive and predatory practice that punishes
people simply for being poor? The short answer is that we
don't. We have to abolish these practices once and for all.
Thank you, and I yield back.
Chairman Perlmutter. The gentlelady yields back.
The gentleman from Tennessee, Mr. Kustoff, is now
recognized for 5 minutes.
Mr. Kustoff. Thank you, Mr. Chairman, and thank you to the
witnesses for appearing today.
Professor Zywicki, I received an email from Morning
Consult. It was in February it came out, and their numbers
showed in their survey that 89 percent of consumers find their
bank's overdraft protection valuable. Seventy-four percent of
consumers who have paid an overdraft fee in the past year
likely were glad that their bank covered the overdraft, which
runs contrary, obviously, to the tone of this hearing.
But if I can, I would like to drill down a little bit from
Congressman Barr's questions to you. As it relates to an
overdraft fee or a debit card or an ATM transaction, the bank
has to provide the consumer with the disclosure which lists the
fee for the charge for the overdraft transaction. Is that
correct? And then, the consumer has to opt in, if I am correct,
for overdraft coverage in order to be charged an overdraft fee,
at least as it relates to the debit card or the ATM. Is that
correct?
Mr. Zywicki. That is correct, yes.
Mr. Kustoff. And as a corollary, the consumer also can opt
out at any time. Is that correct?
Mr. Zywicki. That is correct, yes.
Mr. Kustoff. I am just going to ask a rhetorical question.
If a consumer can willingly opt into overdraft coverage or opt
out, why are we trying to protect consumers or employ
additional restrictions or take away the right for them to have
overdraft protection on a product?
Mr. Zywicki. I don't know. They can opt in, they can opt
out, and I think it is also significant, as I mentioned in my
remarks, that people who overdraft frequently actually check
their balances more often. They make more use of online banking
and they kind of constantly know what is going through their
accounts, and they know they are taking a chance, basically,
when they make that payment.
Mr. Kustoff. Thank you.
I think, as we all know, we are experiencing the highest
inflation we have experienced in 40 years due to the economic
policies and the wild spending that the Federal Government has
engaged in over the last 12 months. The Federal Reserve reports
right now that half of the country couldn't cover a $400
emergency expenditure. And obviously, few people have the
resources to turn anywhere else to get help.
In the past, we have had banks offer short-term liquidity
products. Obviously, regulation has effectively taken a number
of banks out of this space, which means that ultimately,
consumers have fewer alternatives for emergency needs.
I came from a community bank board. Hypothetically, if you
were running a community bank, and overdraft protection were to
completely go away, how would your community bank respond, and
ultimately what would that mean for consumers?
Mr. Zywicki. I don't know. It is very limited. As you said,
every time you try to have a new product that adds more
complexity, there are more compliance costs. The other thing we
know is that post-Dodd-Frank, community banks have already
stepped back from products they used to have, such as
mortgages, because of the regulatory costs of compliance
associated with that. So, I think it really puts community
banks in a very difficult position.
Mr. Kustoff. If you were a policymaker or you were in the
financial services industry, what would you do to support or to
create innovative products to try to help consumers with their
short-term needs? What else can we do?
Mr. Zywicki. As I mentioned, I think the answer here is
more competition, more entry. As I said again, fintech
industrial loan companies, earned wage access, direct deposit
advance, all of these things I think are viable options for
consumers that solve this.
If I could say one last thing, the correlation here--and
first, let me say, I never said it doesn't affect low-income
consumers. Obviously, this affects all consumers who overdraft,
but especially low-income consumers, because it is a fixed fee.
But what drives this is credit score, and the Fed has shown
that credit score is generally not correlated with income and
it is not correlated with demographic factors such as race. It
is a credit score issue, not a race or income issue, once you
control for credit score in that sense. I am not talking about
some of the things they are talking about. But I just wanted to
make that very clear.
Mr. Kustoff. Thank you.
Mr. Chairman, I yield back.
Chairman Perlmutter. The gentleman yields back.
I think we have three more Members to ask questions, so I
am going to go to Mr. Rose first, then Mrs. Maloney, and then,
Mr. Timmons.
The gentleman from Tennessee, Mr. Rose, is recognized for 5
minutes.
Mr. Rose. Thank you, Chairman Perlmutter and Ranking Member
Luetkemeyer, for holding this hearing, and thank you to our
witnesses for being with us today.
The CFPB under Director Chopra continues to assert that the
financial services industry is not competitive and is using
this as a premise to justify an extremely aggressive rulemaking
agenda.
Yesterday, CFPB Program Manager Joe Valenti published a
blog post stating that, ``Overdraft fees are among the kinds of
junk fees that far exceed what it costs the institution to
provide the associated product or service and do not appear to
be subject to competitive forces.''
Professor Zywicki, would you describe the market for
overdraft products and other short-term credit as competitive?
Or do you agree with this blog post from the CFPB?
Mr. Zywicki. I think it is competitive. It could be more
competitive. We know, for example, in States that outlawed
payday loans, what happens is NSF fees go up, bounced checks go
up, overdraft fees go up, right? When you take away competition
from banks, they make more money off of overdraft fees and NSF
fees. So, I think the corollary is more competition for banks.
There is already competition, but more competition, I think,
would be the path I would pursue here.
Mr. Rose. The Biden Administration seems to think that
regulation, not market forces, drives competition. This was
made especially clear in President Biden's 2021 Executive Order
on promoting competition in the American economy.
Professor Zywicki, do you think more regulation from the
CFPB is the solution to increasing market competition?
Mr. Zywicki. No, unfortunately, regulations usually reduce
competition rather than increasing it, at least the way that it
has been transpiring.
Mr. Rose. Professor, you previously served as the Chair of
the CFPB's Task Force on Consumer Financial Law under Director
Kraninger. The task force identified recommendations for
improving competition, including studying ways to ease changing
accounts between financial institutions, avoiding the anti-
competitive barriers to entry, and studying the cost of lending
in key product markets. Could you describe some of the task
force's work on these issues?
Mr. Zywicki. Thank you, yes. We have a number of
recommendations that go to this, one that was mentioned
earlier. I really believe that faster payments should be
something that we should push on, but also bank account
portability, as you said, greater fintech. We also talked a lot
about credit scores, and I think one opportunity is to make
greater use of alternative financial data to look at other
sources rather than traditional credit scores in determining
who is a good risk and the like. So, I think there is a lot of
room for innovation in this market to put more competitive
pressure on banks to do better, to create bank account
portability, open banking, and a lot of things that would cause
them to be more responsive to consumer demands.
Mr. Rose. Could you drill down a little on the banking
account portability question and what sorts of approaches you
would recommend or would like to see implemented there?
Mr. Zywicki. The details of that, I think, still need to be
worked out, but the model is obviously cell phone portability,
which has been very popular. You can change your cell phone
carrier while keeping your same number. Right now, it is very
difficult to change bank accounts. It is really just a pain
because you have to deal with trailing checks and that sort of
thing. So, I think trying to work through the regulation and
the process would facilitate bank accounts, because right now,
people can change credit cards very easily, for example, which
drives a lot of competition in the credit card market. But when
it comes to bank accounts, they are very sticky, and banks make
them more sticky. Rather than facilitating competition, if a
bank wants new accounts, rather than trying to track them, it
seems like they just buy another bank, right? So, we
consolidate the industry, we are getting more, and the like. I
think that would be something that would be worthy of study by
the Fed and others for how to improve bank accounts, and make
it easier to switch bank accounts.
Mr. Rose. Thank you.
In the last seconds I have, I want to just relay an
anecdote from one of my bankers back in my district whom I was
having dinner with a few weeks ago, and he related to me that
one of his customers--and this is kind of following on what
Representative Barr said earlier--an elderly lady, on a limited
income, perpetually came up short at the end of the month, and
so essentially, once a month, she overdrafted.
She came to the bank and she said, ``Please, whatever you
do, don't take away my overdraft capability.'' And I think it
underscores that this oftentimes provides a needed outlet for
many banking customers.
Thank you, Mr. Chairman. I yield back.
Chairman Perlmutter. The gentleman yields back.
I was mistaken. Mr. Timmons, you are going next. So, I am
going to yield to the gentleman from South Carolina, and then
we will close with Mrs. Maloney from New York.
The gentleman is recognized for 5 minutes.
Mr. Timmons. Thank you, Mr. Chairman.
Professor Zywicki, since Dodd-Frank passed, how have
community banks across the country generally fared?
Mr. Zywicki. They have not fared well. As you know, the
banking industry has become more consolidated, and community
banks have shrunk.
Mr. Timmons. What about the regional banks?
Mr. Zywicki. The regional banks have tended to constrict
also. The big banks have gotten bigger. The too-big-to-fail
banks have gotten even bigger.
Mr. Timmons. Generally, who bears the brunt of proposals
such as the Maloney overdraft bill, what types of institutions?
Mr. Zywicki. In the short run, small banks bear most of the
brunt, for the reasons we have talked about.
Mr. Timmons. And Federal requirements, Federal regulations
are largely more challenging to comply with when you are a
smaller bank. Is that fair?
Mr. Zywicki. That is right. To hire another 150 lawyers at
Citi is a rounding error. To hire one more compliance officer
at some small bank could be the difference between
profitability and not.
Mr. Timmons. And they are already struggling with things
like cyber security, where they are trying to invest
appropriately, and that is a huge line on their balance sheet.
So, it is fair to say that if you are a small bank in this
country post-Dodd-Frank, it has been challenging, and you are
barely getting by?
Mr. Zywicki. That is an understatement.
Mr. Timmons. Thank you.
I am confused about what exactly we think we are
accomplishing with this hearing and the Maloney bill. It is
obvious to me that this is just another onerous mandate for
smaller financial institutions like community banks and credit
unions, especially given that consumers already have to opt in
for overdraft protection and can opt out at any time. On top of
this, a recent survey from Morning Consult shows that 89
percent of consumers value their bank's overdraft protection,
and even 74 percent of individuals who have been subject to an
overdraft fee over the last year were glad their bank covered
the payment.
Professor, if consumers no longer had access to overdraft
protection through their financial institutions, what recourse
would they have?
Mr. Zywicki. They would either be forced to not be able to
purchase things that they need, or they would have to turn to
some less attractive alternative, usually payday loans,
because, as we talked about, credit cards aren't available for
these people.
The other thing we know is that occasional overdrafters and
frequent overdrafters are different categories. You can get a
fee waiver, especially if you are an occasional overdrafter. An
important point that Michael Flores found is that low-income
consumers are more likely to get fee waivers than people with
higher levels of deposits. There are other things going on in
people's relationships with banks if they are occasional
overdrafters versus frequent overdrafters.
Mr. Timmons. I remember long ago, I had challenges with
this. My first debit card didn't really--I wasn't very good
with my money at a certain point in my life, my entire life.
But my question is this, how often do people get the benefit of
overdraft protection and it changes their day and their week,
instead of the alternative, which is to be declined and be
unable to do something at gas stations or grocery stores? There
are oftentimes when if you are not able to get the benefit of
your overdraft protection, it could be very problematic.
Mr. Zywicki. And that is the fundamental problem here,
Congressman Timmons, which is taking away people's options
isn't going to resolve the problem, right? Taking away the
supply of overdraft protection isn't going to take away the
demand, because people still have a lot of bills they need to
pay, a lot of necessities that they need to pay for, and that
is the fundamental problem here, or the fundamental difficulty,
which is, what happens to these people if you take it away? And
based on what I can tell, the options are even less attractive
than the ones they have now, especially given that they seem to
be using it--heavy overdrafters at least--knowingly. They have
opted in, they are monitoring their balances, and they
understand basically what they are doing here, but they don't
have better options available to them.
Mr. Timmons. Thank you.
This hearing's proposal is just another example of my
colleagues across the aisle thinking that they know what is
best for the American people. They want to run our lives
because they don't think that we are capable of making correct
decisions. This proposal removes choice and options for
consumers in the name of protection, but it is really just
another way to impose the will of my colleagues across the
aisle on the American people.
Thank you, Mr. Chairman. I yield back.
Chairman Perlmutter. The gentleman yields back.
I was mistaken again. Mr. Foster has arrived, and we will
let him ask his questions for 5 minutes, and then Mrs. Maloney
will close.
Mr. Foster is recognized for 5 minutes.
Mr. Foster. Thank you, Mr. Chairman.
I find it interesting that many banks and credit unions are
already making changes to overdraft policies. According to the
CFPB, since September 2021, nearly half of the 20 banks that
collect the most overdraft fees have announced that they will
eliminate the fees altogether. I think this sort of behavior is
likely to continue as we move to a high-interest-rate
environment where you actually have alternate sources of income
for banks and they won't depend on reordering things and so on
to generate overdraft fees.
Several of these have already eliminated, as I mentioned,
the overdraft fee programs in place. Chris Leonard, the CEO of
Velocity Solutions, an overdraft and compliance management
company, has asserted that overdraft fees should not be
jettisoned completely, saying that many consumers actually like
having the option, although I imagine very few like having the
things reordered to maximize those fees.
In reality, most of these fees are incurred because people
are simply unaware that their account is too low and that they
are about to incur a charge. Then, unfortunately, they get
their cup of coffee or pay for parking and they are handed a
$30 or $40 fee to complete the $5 transaction.
And seeing as most accounts are rectified very quickly, the
short-term financing option seems wildly unappealing from a
consumer financial standpoint.
I am personally very glad to see that competition among the
banks has driven this trend to modify or eliminate these fee
arrangements. So my question, I guess to all of the witnesses,
is that someone has to be the first to eliminate overdraft fees
in their checking products. Is this just a reaction to a wildly
popular consumer idea, or are there other factors influencing
the change across the industry, such as, for example, moving to
a higher interest rate environment?
Mr. Greer. Congressman, we have been talking about
protection, and we have been talking about fees. Those two are
different things. People can opt into protection, get an
expense covered through credit, and then also charged a fee.
There are banks that do that. Wells Fargo is one of them, for
example. Then there are people who can opt out, and then what
they get is an insufficient funds fee even though the
transaction [inaudible]. There has been a lot of conversation
about protection and fees, and I just want to say that those
things are two different things in the financial sector.
As far as industry-wide, again, I think we have to
recognize that particularly people of color are low wealth, and
not having access to credit is one of the things that drives
low wealth. Not having access to predictable income that allows
them to build assets is another. And to strip that money out of
their accounts through things like fees has implications beyond
whether or not they are able to buy a cup of coffee.
Mr. Sueiro. To your question, Congressman, about what has
caused some banks to make these changes, in the middle of last
year, around the middle of last year, Ally Bank and Chime,
which are online banks, made announcements that they would
eliminate fees or reduce overdraft fees, so that has put
pressure on other banks to follow suit. And then late last
year, Director Chopra of the CFPB also made an announcement
that the CFPB would focus more on junk fees and on overdraft
fees specifically. So, I think the combination of the two
things also, in addition to consumers saying that they want
overdraft protection and overdraft fees reduced, has led to
these changes.
Mr. Foster. Ms. Crawford-Hicks, do you have any comments
about what is driving this and how much we can expect it to
continue without more intervention by the government?
Ms. Crawford-Hicks. I think my colleagues summed it up
beautifully in terms of what is driving it, and I just wanted
to home in on the point that fees and protection are different
things. We are not saying to end overdraft protection. We are
just saying that these fees, as Representative Maloney points
out in her bill, should be reasonable and proportional to what
it costs the banks to actually take care of the overdraft.
Mr. Foster. Mr. Kundert, can you talk about how your credit
union was involved in this process?
Mr. Kundert. Yes. In my written testimony, I covered it in
great detail, but we reformed our practices in 2010 in response
to the Regulation E update, and then, last year, reduced our
fee to $5.
Definitely, there is change happening in the industry.
Prior to 2020, you might have questioned, is there competition?
There wasn't much evidence of it, but things are changing now.
They changed in the last year. How much of it is concern over
regulatory scrutiny, and how much is competition, I couldn't
sort out right now. I think time will reveal that.
Chairman Perlmutter. Mr. Kundert, I am going to interrupt
you this time. The gentleman from Illinois' time has expired.
I will now recognize the gentlelady from New York, Mrs.
Maloney, for 5 minutes for her questions.
Mrs. Maloney. Thank you, Chairman Perlmutter. And may I
express how sad I am that you have decided to retire. Today's
hearing shows your focus on protecting consumers, and your
focus on affordable housing. You will be deeply missed. I thank
you for having this hearing, as well as the ranking member.
There was a report that came out from the CFPB which showed
that in 2019, consumers paid over $15 billion in overdraft
fees. Granted, some people opted in, and I am not trying to
take away an opt-in. I think an opt-in should be there if they
want it. But too often, people are caught in tricks and
gimmicks and unfair, deceptive practices that force them,
really, into overdraft fees, such as reordering the priority of
your fees so that your rent check comes first. I know
constituents, some of whom pay $200 in overdraft fees they
didn't even know they had overdrafted. They didn't know that
the bank took their rent check and put it before their coffee
or their sandwich, and it racks up. So, my bill tries to cut
down on these unfair and deceptive practices.
I have here a report from the CFPB that I requested, and
there are many, many people who have taken steps to change the
overdraft fees, to eliminate them in some cases, or to lower
them in some cases. But I have been studying this since 2009,
when I put my bill in, and it is confusing to me because
everybody is doing something different. Everybody is doing
something different, and I applaud their efforts. But if I were
a consumer, and I am a consumer, it is very confusing.
So, my question to Mr. Greer, Ms. Crawford-Hicks, Mr.
Kundert, and Mr. Sueiro, is, do you think consumers would
benefit by at least, at minimum, having some baseline level of
protections for overdraft practices such as my bill?
Let's start with you, Ms. Crawford-Hicks, yes or no?
Ms. Crawford-Hicks. Absolutely.
Mrs. Maloney. Thank you.
Mr. Kundert?
Mr. Kundert. Yes, I do.
Mrs. Maloney. Okay. Mr. Sueiro?
Mr. Sueiro. Yes.
Mrs. Maloney. Mr. Greer?
Mr. Greer. Yes.
Mrs. Maloney. Okay. That's great; you all agree on that.
Do you think those protections should include common-sense
limits on the number of overdrafts that are allowed per month,
improved transparency so people understand what is happening,
and banning banks from reordering transactions to maximize the
number of overdraft fees for people?
Let's start with you, Mr. Greer.
Mr. Greer. Yes, I think it should.
Mrs. Maloney. And let's just go down the line. Ms.
Crawford-Hicks?
Ms. Crawford-Hicks. Yes.
Mrs. Maloney. Mr. Sueiro?
Mr. Sueiro. Yes. It depends on what that looks like, and we
agree that some people would definitely want overdraft
protection. But, yes, we agree with that.
Mrs. Maloney. That is exactly what my bill does. It allows
people, if they want the overdraft protection, to opt in. That
is one of the requirements of the bill, that people be notified
that if you want this protection, you opt in. But too often, I
hear from my constituents that they bought a loaf of bread,
$35; a cup of coffee, $35; a newspaper, $35; and some, at the
end of the weekend, because they didn't know they had
overdrafted, will have $200 in fees. I would say that is unfair
and deceptive and extremely hard on some of the most-vulnerable
in our society.
Now, from your perspective, Ms. Crawford-Hicks, do you
think someone should be charged $35 for a $2 cup of coffee?
Ms. Crawford-Hicks. No, especially if they didn't know they
overdrafted.
Mrs. Maloney. Right.
Mr. Sueiro?
Mr. Sueiro. I agree, 100 percent.
Mrs. Maloney. Okay.
And Mr. Greer and Mr. Kundert?
Mr. Greer. No.
Mr. Kundert. No.
Mrs. Maloney. Okay, a no. You have gone down to a $5 cup of
coffee, and that is a movement in the right direction. But
everybody has something different here.
Mr. Kundert. Actually, no. We have a de minimis so that no
overdraft would be incurred for anything less than $10, and we
don't permit overdrafts from debit card use.
Mrs. Maloney. But as you see, everybody has a different
proposal. I would like to suggest, since the CFPB was
referenced several times during this hearing, that we invite
the Director of the CFPB to come in for some clarification on
this. I do have a bill that I have had in for a number of
years, the Overdraft Protection Act, which is common sense.
Some of the panelists today have endorsed it. It has common-
sense practices that protect the consumer. I, for one, would
like to see that $15 billion kept in the pockets of some of our
most-needy residents, and not going to unfair, deceptive, and
manipulative overdraft fees.
My time has expired.
Chairman Perlmutter. The gentlelady's time has expired.
CFPB Director Chopra is going to testify in front of the
Full Committee next month, so we will have an opportunity to
discuss this with him then.
Do you want to introduce that chart into the record?
Mrs. Maloney. I would like to introduce it into the record,
and I am going to have it up on my website, and I think we
should put it up on the website of the committee.
Chairman Perlmutter. Without objection, it is so ordered.
Mrs. Maloney. It is very confusing, but I applaud Wells
Fargo, JPMorgan Chase, Bank of America, TD Bank, Citi Bank--
Chairman Perlmutter. Okay, it is in the record.
[laughter]
Mrs. Maloney. There are about 13 banks that have come out
and curbed them in some way or another, but each one has done
it differently. No one has done it the same way.
Chairman Perlmutter. Okay, we got it. The gentlelady's time
has expired. We will introduce your chart into the record.
I want to thank the witnesses, and I want to thank all of
you. The discussion about fees versus protection is very
important, to be able to make that distinction. I appreciate
everybody's testimony here today.
The Chair notes that some Members may have additional
questions for these witnesses, which they may wish to submit in
writing. Without objection, the hearing record will remain open
for 5 legislative days for Members to submit written questions
to these witnesses and to place their responses in the record.
Also, without objection, Members will have 5 legislative days
to submit extraneous materials to the Chair for inclusion in
the record.
Thank you all very much for your time, for your testimony,
and for your patience with us.
With that, this hearing is adjourned.
[Whereupon, at 12:03 p.m., the hearing was adjourned.]
A P P E N D I X
March 31, 2022
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