judge's chambers
Less than a week after seven credit union and banking groups filed a lawsuit in the U.S. District Court for the Southern District of Mississippi to fight back against the CFPB’s final overdraft rule, the same seven groups filed a preliminary injunction in the same court to stop the rule’s effective date of Oct. 1, 2025.
The lawsuit was jointly filed Wednesday by America’s Credit Unions, the American Bankers Association (ABA), Consumer Bankers Association (CBA) and the Mississippi Bankers Association. Other plaintiffs in the lawsuit includes Arvest Bank in Fayetteville, Ark., Bank of Franklin in Meadville, Miss., and The Commercial Bank in DeKalb, Miss.
Last week, the CFPB announced its final overdraft rule, which reforms overdraft fee options for credit unions and banks with assets of more than $10 billion. Those financial institutions, according to the final rule, can choose to charge a $5 overdraft fee, charge a fee that covers no more than the cost or losses of an overdraft transaction, or charge a fee while disclosing the interest rate of the loan.
The 33-page lawsuit filed Wednesday asked the court to halt the implementation date and stop credit unions and banks from spending time and resources preparing for the rule while legal challenges to the rule are in motion.
According to the lawsuit, the argument for a preliminary injunction includes the following issues:
- The CFPB exceeds its statutory authority by seeking to regulate discretionary overdraft services as credit.
- The CFPB exceeds its statutory authority by using a disclosure statute to impose substantive restrictions on discretionary overdraft services.
- There is a substantial threat of irreparable injury.
- Discretionary overdraft fees at or above the price cap or “breakeven” cost.
- The balance of harms and the public interest favors an injunction.
While the final rule is set to go into effect on Oct. 1, 2025, the chances of that happening remain slim as the incoming Trump Administration is ready to replace Chopra and potentially roll back or try to fully dismantle the rule.
Congress could overturn the rule using the Congressional Review Act, which allows lawmakers, with the President’s signature, to overturn rules using expedited procedures and a simple majority vote.
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Michael Ogden
Editor-in-Chief at CU Times. To connect, email at [email protected]. As Editor-in-Chief of CU Times since 2016, Michael Ogden has led the editorial team in all aspects of content strategy and execution, including the creation of the publication’s exclusive and proprietary research database of the credit union industry’s economic landscape. Under Michael’s leadership, CU Times has successfully shifted to an all-digital editorial product with new focuses on the payments, fraud, lending and regulatory beats. Most recently, he introduced a data-focused editorial product for subscribers that breaks down credit union issues into hard data, allowing for a deeper and more factual narrative for readers. In 2024, he launched the "Shared Accounts With CU Times" podcast, which offers a fresh, inside-the-newsroom perspective through interviews with leaders from the credit union industry and the regulatory world. He dives into pressing credit union issues, while revealing the personalities working behind-the-scenes to push the credit union world forward. His background includes years as a radio and TV anchor/reporter and a public relations and digital/social media manager, where he covered the food and music industries, as well as cooperatives and credit unions. Over the years, he has launched numerous exclusive video and podcast series, including a successful series of interactive backstage interviews with musicians at music festivals, showcasing his social media and live streaming production skills.
