Senator Reverend Warnock Examines the Effect of Overdraft Fees on Georgia Families, Reaffirms Commitment to Lowering Rising Costs

"I'm honored to chair this subcommittee and work with Ranking Member Tillis to lower everyday costs for Georgians and Americans, and ensure stability in our banks, credit unions, fintechs, and other financial institutions that serve families, small businesses, and communities in Georgia and around our country. And I'm proud of our efforts to ensure that communities have equal access to the financial resources that build an economy that works for all Americans.

"Today's hearing will examine the financial services industry's practices and innovations around overdraft fees and the effects those fees, or lack of fees, have on hardworking families.

"The economic turbulence of the COVID-19 pandemic has pushed working families to the brink.

"Thanks in part to the relief passed by Congress to combat the pandemic, including the American Rescue Plan, our nation is recovering and rebuilding. Still, there is more to be done to bring financial stability to hardworking families in Georgia and across the country--and heavy overdraft fees keep people within cycles of debt and poverty.

"Last December, the CFPB released a report that many banks have a deep dependence on overdraft fees. Some banks that make billions of dollars per year pad their profits with billions more from charging disproportionate fees, as much as $38 for overdrafting just a few dollars beyond what is allowed.

"Fees also are keeping hardworking Americans out of our financial system, particularly those living on the edge of our economy. One-third of unbanked households cite high fees as the reason that they remain without a bank account. And we know these types of fees affect people of color at a disproportionate rate.

"Studies have found that, on average, banks with branches in predominantly Black neighborhoods charge more for overdraft services. And customers who overdraft the most throughout the year tend to have lower-income, poorer credit scores, and are disproportionally Black and Hispanic.

"In response to the uncertainty brought on our nation by the pandemic, many banks moved to waive fees charged to their customers like overdraft fees, and fees for non-sufficient funds. This is in stark contrast to how the financial industry responded after the 2008 Financial Crisis, and I applaud those banks for making the right choice to help communities.

"Some of these same banks have now voluntarily made these changes permanent, and every month we hear of more following their peers in doing the same.

"Additionally, many fintech companies--like the one before the Subcommittee today--are also offering innovative new products and services to help customers avoid fees.

"I have heard from Georgians about the negative effects overdraft can have on their lives. In the C-F-P-B's requests for feedback on fees, one Georgian serving in the military wrote about how technical glitches and shady business practices by their large bank cost them money and stress while preparing to deploy to a war zone. In another comment, a student at Georgia Tech wrote about how what little money they had while studying for an engineering degree was being quote "skimmed off by these fees."

"This is also personal for me: in addition to serving as a Senator for Georgia, I'm also the Senior Pastor of the historic Ebenezer Baptist Church in Atlanta.

"My church counts among its members Georgians from every walk of life. And we look out for each other. As a pastor and as a Senator, I see my work as grounded in serving others and my community--and I want to extend this call to our nation's banks, credit unions, fintechs, and other financial institutions.

"I believe Congress, and this Subcommittee, in particular, have an important role to play to ensure that the financial institutions that support our communities, small businesses, and working families have the resources, tools, and support to continue their important work. But at the same time, we must hold financial institutions accountable when they juice their profits off the backs of struggling Americans. And ensure that they are not looking at these customers as easy marks to be taken advantage of with onerous or opaque fees.

"I'm focused on lowering costs for Georgians and saving them money. Like all of my hearings, this hearing is about helping people, helping communities, and helping small businesses. As American families, small businesses, and communities recover, we must ensure they have the resources they need not only to survive, but to thrive.

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