Senators ask Dimon to justify new checking account fees

Two Democratic senators have expressed concern about a recent statement by JPMorgan Chase indicating it will impose new checking account fees.

In a letter to the bank’s CEO, Jamie Dimon, Sens. Elizabeth Warren, D-MA, and Chris Van Hollen, D-MD, called the potential new costs “outrageous,” especially compared to a record 49, $6 billion recorded by JPMorgan last year. in profit.

“JPMorgan Chase’s potential imposition of new costs on its clients in response to legal and long-overdue efforts to curb abusive fees — at a time when the bank is making record profits and funneling those profits directly into the pockets of its executives — is outrageous ,” the senators wrote Friday. “JPMorgan Chase should suspend any plans to levy additional taxes on working Americans.”

Marianne Lake, JPMorgan’s head of consumer and community banking, told The Wall Street Journal last month that the lender plans to offset higher regulatory costs for consumers by charging them for checking accounts and wealth management tools if the rules become laws.

“The people who will be most affected are those who can afford the least, and access to credit will be harder to come by,” Lake told the publication.

The senators cited the Consumer Financial Protection Bureau’s finding that 9 percent of consumers pay about 80 percent of all overdraft fees and underfund fees — and that 9 percent are often the most vulnerable.

The CFPB proposed in January reducing overdraft fees charged by banks with assets of $10 billion or more to $3 and down to $14. The proposed rule requires banks to classify overdraft fees as extensions of credit, bringing them under the same consumer protections as credit cards. It would also require banks to disclose an annual percentage rate for these fees.

The proposed rule gives banks the option to make their own calculations or charge the benchmark set by the CFPB. The proposed changes were aimed at reducing the $9 billion a year in revenue that banks make from overdraft fees, according to the bureau’s estimates. That $9 billion total is down from $12.6 billion in 2019.

JPMorgan collected $1.1 billion in overdraft earnings last year and is funneling $30 billion to its investors through its share buyback program, the senators wrote on Friday.

“There is no justification for imposing new fees on working families when your bank is extremely profitable,” the lawmakers wrote, calling the lender “the industry leader when it comes to usury overdraft fees.”

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Indeed, that $1.1 billion is equal to the amount Bank of America and Wells Fargo collected together in 2023, according to a CNBC report in February that cited regulatory filings from all three banks. Together, they collected $2.2 billion in overdraft fees in 2023, CNBC reported. That figure was down about 25 percent — $700 million — from a year earlier.

Warren and Van Hollen argued that JPMorgan would lose 2 percent of its profits if it did not charge overdraft fees, and questioned whether a 2 percent loss justifies imposing sweeping new rules on clients.

The senators asked what specific new fees the bank plans to impose after the CFPB rule is finalized and how JPMorgan plans to protect its low- and middle-income clients from fees.

They also wanted an estimate of how much the bank would collect in overdraft fees under the CFPB rule and whether the lender would reduce stock buybacks or executive pay instead of imposing the new fees. They are seeking a response by August 28.

Overdraft fees haven’t been in the spotlight for a while, but they gained attention in 2021 and 2022 when a number of banks reduced or eliminated them altogether. Citi and Capital One were the biggest banks to get rid of them, while Bank of America and Wells Fargo cut back significantly.

JPMorgan, for its part, gave clients an extra business day to restore overdraft accounts to $50 or less in the red before being charged a fee. Those changes “are not insignificant,” JPMorgan executives said at the time.

Warren and Dimon frequently clashed when the CEO appeared on Capitol Hill. In a 2021 hearing on overdraft fees, Warren called Dimon “the star of the overdraft show,” and asserted that JPMorgan would have made enough profit without collecting the fees.

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