NEW YORK–Chase Bank, the nation’s largest financial institution, is warning that if new rules capping overdraft fees on checking accounts and late fees on credit cards are enacted, those services are going to become significantly more expensive for consumers.
It's a warning similar to one that credit unions have also been sounding ever since the proposals were made public by the CFPB, the Fed and others.
Marianne Lake, who heads up Chase Bank, the retail operation of JPMorgan Chase, said the bank is planning to pass on the costs of higher regulation and charge customers for a number of now-free services, including checking accounts and wealth-management tools, if the rules become law in their current form, the Wall Street Journal reported.
Lake told the Journal she expects her banking industry peers will follow suit.
“The changes will be broad, sweeping and significant,” Lake was quoted as saying. “The people who will be most impacted are the ones who can least afford to be, and access to credit will be harder to get.”
Point of Disagreement
But not everyone agrees.
“The banks say that their only option is to pass on their costs to customers, but that’s not true,” Dennis Kelleher, president of Better Markets, an economics think tank that is in favor of the proposed bank regulations, told the Wall Street Journal. “Yet again, banks are dressing up their attempts to maximize their own profit under the guise of what’s good or bad for customers.”
But Chase Bank and others have countered by saying this time could be different because of the scale of new financial regulations coming out of Washington, including the CFPB’s proposed $8 cap on credit-card late payment fees and a $3 cap for overdrafting bank accounts, the Journal noted.
As CUToday.info has reported, the Federal Reserve is also planning to further limit debit-card fees and how much FIs can charge to software companies like Venmo and CashApp for accessing and using their customers’ data.
Struggle for Smaller FIs
A representative of PricewaterhouseCoopers who advises bank clients told the Journal, “Big banks can make up for a dent in consumer banking revenues with profit from their wealth management and investment banking arms. Smaller and regional banks will struggle to make up for that.”