Arlington, VA – Rep. Andy Barr (R-KY) has sponsored a Congressional Review Act (CRA) resolution which, if approved, would overturn the Consumer Financial Protection Bureau’s (CFPB) latest rule limiting late fees on credit cards. Next Wednesday, the House Financial Services Committee will review and potentially approve the CRA. Policy Analyst Isaac Schick at the American Consumer Institute believes the CRA will protect consumers from ill-conceived rulemaking by the CFPB.
“The CFPB’s rulemaking on credit card late fees has flown in the face of basic economics, inadvertently harming consumers. History has shown us that price controls only lead to shortages, and the CFPB’s $8 cap on late fees is no different. These late fees exist for a reason, and capping them will only force banks to limit credit to consumers who need it or make up the money in other ways, like charging higher rates.
Furthermore, late fees provide a perfect incentive for borrowers to pay their bills on time, and the evidence backs this up. Public opinion also largely conforms with the evidence and agrees that higher fees decrease tardiness. Why can’t the CFPB admit what the public believes and the facts bear out? It is up to Congress, as the avatar of the people’s will, to rein in agencies that act out of step with reason and popular will, and Rep. Andy Barr is doing just that.”
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