Senate Democrats call on top banks to waive overdraft fees in wake of failures

Democrat Sens. Cory Booker (N.J.) and Raphael Warnock (Ga.) sent letters to 10 large banks and federal regulators on Tuesday, urging them to pause overdraft fees in the aftermath of recent U.S. bank failures.

The pair of senators sent the letters to the CEOs of Wells Fargo, U.S. Bank, Citizens Bank, Truist Bank, TD Bank, Regions Bank, PNC Bank, Huntington National Bank, Bank of America and JPMorgan Chase. They asked the bank CEOs to “provide relief” for consumers who are facing challenges, especially with their payments and payrolls.

“We urge you to take action to assist Americans whose payments were delayed or missing in recent days as a result of the bank failures of Silicon Valley Bank (SVB) and Signature Bank,” the senators wrote. “In particular, we urge you to cease charging overdraft and nonsufficient fund fees for those that may have incurred these costly fees at no fault of their own.”

The senators cited how disruptions across the banking industry, particularly the collapses of Silicon Valley Bank and Signature Bank, negatively impacted Americans, and argued that consumers should not be responsible for a bank’s troubles. The letter stated that overdraft fees “overwhelmingly” target Americans living paycheck-to-paycheck, noting that they could pay “up to $111 a day for low account balances or up to $175 a day on overdraft fees.”

“Every single overdraft fee is paid by someone who ran out of money in their bank account. People living on the financial edge deserve protection from the consequences of bank misconduct,” the letter read.

A letter was also sent to federal regulators, including Federal Reserve Chairman Jerome Powell, Federal Deposit Insurance Corp. Chairman Martin Gruenberg, Michael Hsu, the acting comptroller of the currency and Todd Harper, the chairman of National Credit Union Administration. The senators asked that the federal agencies place a moratorium on overdraft and nonsufficient fund fees.

“In particular, we urge you to place a brief moratorium—while the disruption in payments is resolved—on overdraft and nonsufficient fund fees for those that may have incurred these costly fees at no fault of their own,” the senators wrote in a letter to regulators.

The banking industry is undergoing a tumultuous period this month after Silicon Valley Bank and Signature Bank closed and larger banks bailed out the First Republic Bank. The turmoil has sparked concerns among markets and policymakers that it could sparker a broader crisis, even as Treasury Secretary Janet Yellen said Wednesday that the “situation is stabilizing.”