As the Biden administration works to curb junk fees, big banks keep charging the fees while earning record profits and some even want to increase the fees.
CitiGroup, Wells Fargo, and JPMorgan Chase & Co. – three big banks that continue to charge junk fees – announced Friday more than $26 billion in combined second quarter earnings.
Junk fees levied by banks and financial companies cost American families billions every year.
In the beginning three months of 2024, CitiGroup, Wells Fargo, and JPMorgan Chase & Co. earned $2.56 billion in revenue from these fees, according to Accountable.U.S., a government watchdog group.
“The more Wall Street banks beat profit expectations, the clearer it becomes CEOs do not need to price-gouge Americans with excessive junk fees," Liz Zelnick, director of the Economic Security and Corporate Power Program for Accountable.US, said in a statement.
However, big banks continue to stand in the way of Biden administration actions to stop junk fees and provide relief to families who struggle with credit card debt, Zelnick said.
Right-wing lawmakers in Congress, who get huge contributions from big banks, claim junk fees teach responsibility, but they need to know their constituents are more than just a “profit pool,” she said.
Accountable.US points out that JP Morgan Chase & Co wants to protect fee-related profits, and the bank could even introduce new fees to make up for the lost profits.
Earlier this year, the Consumer Financial Protection Bureau adopted a new rule capping most credit card late fees at $8, down from an average of $30. However, in a setback for consumers, the U.S. Chamber of Commerce – representing major banks such as JPMorgan Chase, CitiGroup, and Wells Fargo – sued to block the rule from being carried out and it earned a stay from a Texas judge, a decision costing American families about $27 million each day that it’s in effect.
Accountable.US is critical of Congressional Republicans who have also fought to keep financial industry junk fees in place.
It points out House Financial Services Committee Chair Rep. Patrick McHenry, R-N.C., has attacked the CFPB’s rulemaking on credit card late fees. McHenry has received more than $1.1 million from the eight largest credit card issuers and banking industry trade groups.
Accountable.US reports that House Financial Services Committee Republicans voted in favor of a Congressional Review Act resolution to block the rule after receiving $7.9 million from the largest credit issuers and industry groups most affected by the CFPB’s potential cap on credit card late fees.
The watch dog group says that despite industry and Republican opposition, the CFPB’s rule would save millions of Americans $220 per year on average, a total of more than $10 billion across the nation annually, and it would be a big step in alleviating huge credit card debt for struggling American families.
