Biden cites bank 'junk fees' as weighing down families

Cracking down on so-called junk fees is turning out to be good politics.

President Biden admonished banks and specifically mentioned bank 'junk fees' in remarks Monday to the White House Competition Council in which the administration took credit for the dramatic drop in overdraft and nonsufficient-funds fees in the past year

Biden used the term junk fees in a nod to Consumer Financial Protection Bureau Director Rohit Chopra, who raised the ire of bankers in January with a request for information on what the agency called "exploitative junk fees." Biden's remarks signal that Democrats think the mention of the fees may appeal to voters ahead of the midterm elections or combat Republican attacks about the economy. 

"What we're talking about today is something that's weighing down family budgets: unnecessary hidden fees — unnecessary hidden fees, known in the parlance as junk fees —  are hitting families at a time when they can't afford it," Biden said. "They shouldn't be paying it anyway, in my view — but [especially not] at a time when they can't afford it." 

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Banking was just one of a range of industries including airlines, cell phone carriers and gas stations that Biden criticized. Biden said he is working to fight inflation and to bring down costs specifically for middle-class families. The dramatic decline in overdraft fees in the past year is something the Biden administration is celebrating. 

"We're on track to lower overdraft fees," Biden said, adding in his signature vernacular: "Catch this … [to] lower overdraft fees by $3 billion a year for primarily middle-class and lower middle-class families who are paying, because they're the ones usually in a position [to] bounce a check."

Nonsufficient-funds fees, which are sometimes called returned-item fees and are assessed when a charge exceeds an account's available balance, have largely been eliminated among the top 20 banks, according to an analysis by American Banker. The top four banks — Bank of America, Citigroup, JPMorgan Chase and Wells Fargo — have all lowered overdraft fees and nearly all major regional banks have as well. Last week, Bank of the West joined a long list of banks that have eliminated or cut overdraft fees. 

Biden said hidden fees hit "middle- and working-class families especially hard. Things like overdraft on your checking account," or a credit card late fee. 

In response to the president's remarks, Lindsey Johnson, president and CEO of the Consumer Bankers Association, said banks are "among the most competitive in the world."

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"We're glad the Administration recognizes all that America's leading banks are doing to support consumers, especially at a time of significant economic uncertainty for the country," Johnson said in a press release. "We hope policymakers and regulators will continue to acknowledge the commitment banks have made and continue to make to help consumers thrive." 

The president also repeated comments he has made in the past about the need for increased competition.

"It's a simple proposition: When companies have to compete, they make better products. And guess what? The price goes down. It doesn't go up when there's competition," Biden said. 

The White House Competition Council is made up of 10 cabinet members and the heads of seven independent agencies. It was created in July 2021 by an executive order to promote competition in the economy and specifically encouraged the CFPB to issue rules allowing customers to download their banking data and take it with them. 

The CFPB is expected to release its data-access rule, known as 1033 for its section in the Dodd-Frank Act, next year.