richard cordray CFPB overdraft feeThe CFPB will not ban financial institutions from charging overdraft fees but it plans to address the issue at some point in the future, according to Richard Cordray, the bureau's director.

During a Feb. 10 online town hall meeting with NCUA Board Chairman Debbie Matz, Cordray said the CFPB received a great deal of input on overdraft fees from credit unions. He indicated that the bureau plans to finalize rules related to other issues in the near future.

"We started with a great deal of work that we were required to do around mortgage. We have certain other things in the queue now. Overdraft is in the queue but not quite as upfront as some of the things I mentioned such as prepaid, payday and [Home Mortgage Disclosure Act]," he said. "But we're thinking about it, working on it and happy to have input."

According to NCUA officials, nearly 1,000 people registered for the online session, and nearly 700 logged in simultaneously.

The CFPB proposed new federal consumer protections for prepaid products in November.

"The proposal would require prepaid companies to limit consumers' losses when funds are stolen or cards are lost, investigate and resolve errors, provide easy and free access to account information, and adhere to credit card protections if a credit product is offered in connection with a prepaid account," a CFPB press release said.

The proposed rule also included "Know Before You Owe" prepaid disclosures that the bureau said would provide consumers with clear information about the costs and risks associated with prepaid products.

Cordray said the CFPB is currently examining several overdraft issues that have been "bones of contention," including the size of fees, frequency of fees, occasions for fees and the ordering of transactions.

"There are certainly a lot of positives in overdraft. It started out as a courtesy product that people like very much, it also can be like any financial product, can be taken to extremes and be abused in various ways and that's a concern where we see that," he said.

The CFPB has yet to release a formal proposal on overdraft fees. Cordray reiterated that the agency's plans are uncertain and not imminent at this point.

"We are not going to be banning the overdraft product. I don't know that we would have the authority to do that and I also don't know if that's justified," Cordray said. "As to whether we will have certain modifications and constraints around existing practices, that will all depend on what we see in the data but I would encourage people to continue to give us plenty of feedback."

When the CFPB prepares a proposal on overdraft products, Cordray said it goes through the Small Business Regulatory Enforcement Fairness Act process.

"NCUA and others are not required to do this but we start convening panels of small providers to give us input on what kind of significant effects the rule may have on small providers and we go from there to then formulate a proposal," he said. "There will be a lot of opportunity for feedback and input as we go through that process."

The CFPB proposed some changes to its mortgage rules in January, which included expanding the definition of small creditor. Cordray said the change would increase the loan origination limit from 500 to 2,000. The proposal would also include mortgage affiliates into the calculation of small credit status. The asset threshold of $2 billion, which is adjusted annually, would remain the same.

"It does represent our thinking that we should take a line that we had set and move it. We'll be interested to hear people's input about that and we welcome that input. For the most part, the massive number of credit unions were already small creditors under our definition," Cordray said. "This will raise the line somewhat higher. I think there will only be about 150 credit unions that will not be small creditors if we finalize the proposal as it is currently set out."

Matz was asked at the town hall for an update on the fixed assets waiver proposal and what changes the industry can expect.

"We are carefully analyzing the comments that we received so thank you to all of you who took the time to send your comments to us," she responded. "We are hoping to have a final rule in the next couple of months. I can't be certain about that because we're still discussing amongst ourselves what some of the changes are that we should make."

The NCUA's plan would eliminate the 5% cap on fixed assets and require credit unions to put together a fixed-asset management plan instead of going through the existing waiver process.

Matz said the NCUA would like to eliminate the waiver process because it is not productive for credit unions. She added that the rule would certainly be finalized by the summer.

"It's not a good use of your time and it's not a good use of our time and so that's something that you can look forward to," she said.

NOT FOR REPRINT

© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.