The CFPB’s final overdraft rule essentially 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.

According to the amicus brief filed Tuesday, the 18 credit union organizations argued, “Several of the Movants’ member credit unions constitute a so-called Very Large Financial Institution (“VLFI”), as that term is defined by the CFPB inasmuch as their assets exceed ten billion dollars. But for the reasons set forth and discussed hereinbelow, even those credit unions who do not constitute a VLFI will be similarly adversely impacted by the CFPB’s Rule, because the CFPB’s Rule will materially impact the manner in which Movants’ credit unions offer services to their consumer members in a profoundly negative manner.

“Moreover, the CFPB’s Rule will materially change the way the Movants’ credit unions’ operations are conducted and will require that, among other things, new accounts (not requested by the consumer) be established, will require credit unions to pass along significant additional and unwarranted operational costs to their consumer members, and could result in the termination of the overdraft services they presently provide, none of which will benefit the consumer. In fact, the implementation of any of these operational changes in response to the CFPB’s Rule will create and inflict significant irreparable harm to the more than 105,000,000 consumer members the Movants represent.”

In a prepared statement, President of the Ohio Credit Union League, Paul Mercer said, “Consumers and credit unions of all sizes would unintentionally bear the negative brunt of the CFPB’s misdirected rule. The fee cap ignores market realities — overdraft programs are a costly, and mostly break even, service for credit unions. But they are widely used, offering members a lifeline from their trusted financial cooperative when they need it most. We must preserve credit unions’ ability to remain autonomous in serving their members.”

The argument for a preliminary injunction, filed on Dec. 18, included 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.

The 18 state credit union leagues and associations represented by the amicus brief included the California Credit Union League, Carolinas Credit Union League, Cooperative Credit Union Association, Cornerstone League, Illinois Credit Union League, Kentucky's Credit Unions, Luminate Louisiana Credit Unions, Michigan Credit Union League, Minnesota Credit Union Network, Mississippi Credit Union Association, Nebraska Credit Union League, Nevada Credit Union League, New York Credit Union Association, Ohio Credit Union League, Tennessee Credit Union League, The League of Credit Unions & Affiliates, Utah's Credit Unions and The Wisconsin Credit Union League.