Business
Overdraft fees would be slashed under new Biden administration rule. What you need to know
If your bank account regularly flirts with negative balances, or you’re just bad at keeping track of your debit card swipes, you’ve probably felt the sting of one of the banking industry’s favorite charges: overdraft fees.
Thanks to a rule finalized Thursday by the federal Consumer Financial Protection Bureau, those fees could drop sharply next year — provided the rule isn’t overturned by Congress or the courts before it goes into effect Oct. 1.
U.S. banks and credit unions opposed the rule, and four of their trade groups filed suit to block it hours after the final rule was announced. One of the groups, the American Bankers Assn., asserted the rule will prompt banks to offer less overdraft protection, which prevents overdrawn checks from bouncing and debit card transactions from being declined.
That protection comes at a price, though, in the form of overdraft fees of about $27 each time a customer withdraws more than their checking account could bear, Bankrate.com reported in August. Last year, according to the CFPB, banks collected about $5.8 billion worth of fees for overdrafts and non-sufficient funds — that is, when a check bounces or a payment is declined.
The CFPB rule is one of several efforts by the Biden administration to attack the estimated $90 billion collected annually in “junk” fees, or hidden charges that have no relation to the costs incurred. Others include a CFPB rule to cut late fees on credit card payments, a Transportation Department rule limiting fees on airline tickets and a Federal Trade Commission proposal taking broad aim at fees charged by ticketing companies, hotels and other service providers.
Under the overdraft rule, large banks and credit unions would have three options when setting fees: They could charge an amount based on the cost of the service, including losses from it; they could charge $5 per overdraft; or they could charge an amount that would generate a profit, but only if they disclosed the interest rate and other terms in advance and sent periodic statements to customers. The third option treats overdraft protection as a form of short-term lending, which technically it is.
Banks and credit unions with $10 billion or less in assets are exempt from the rule.
According to the CFPB, overdraft protection began decades ago as a courtesy that banks offered to customers who had to wait days for paper checks to clear. But as debit cards became more prevalent, banks and credit unions started generating significant profits from those charges. In California, state data show that some credit unions generate more than half their net income from overdraft fees.
A view of the U.S. Consumer Financial Protection Bureau in Washington, D.C., on April 3, 2021.
(Graeme Sloan / Associated Press)
Consumer advocates have been pushing for limits on “predatory” overdraft fees for decades. The fees are coming “overwhelmingly from low-income and a little bit from moderate-income consumers,” who are “by and large living paycheck to paycheck,” said Robert Herrell, executive director of the Consumer Federation of California. “That’s what we find just wholly unacceptable.”
The CFPB has found that less than 10% of consumers pay nearly 80% of the fees, incurring 10 or more charges a year. Since the pandemic began in 2020, though, banks’ revenue from those fees and “non-sufficient funds” charges — incurred when a bank refuses to cover an overdraft — has dropped sharply, partly because of regulators’ scrutiny.
All the same, the bureau estimates that the rule could save consumers up to $5 billion a year, or $225 per household that incurs overdraft fees.
“In practice, overdraft fees have functioned as high-cost credit, so it only makes sense to regulate excessive fees as such,” said Mike Litt, director of the Public Interest Research Group’s consumer campaign. “The CFPB’s rule makes overdraft fees more reasonable and in line with the actual costs to banks.”
The bankers association was not so sanguine, saying the bureau should have held off until the Trump administration takes over. In former President Trump’s first term, his appointees at the CFPB vastly scaled back its rulemaking efforts.
“By taking this action, the Bureau has once again chosen to prioritize demonizing highly regulated and transparent bank fees over its mission to help consumers,” Rob Nichols, president and chief executive of the American Bankers Assn., said in a statement. “This rule, and the government price controls that accompany it, will make it significantly harder for banks to offer this valuable service to their customers, including those who have few other options to cover essential payments.”
Treasury Secretary Janet Yellen speaks to American Bankers Assn. President and Chief Executive Rob Nichols on March 21, 2023.
(Manuel Balce Ceneta / Associated Press)
Nichols said Americans have made it clear in surveys that they don’t want overdraft protection to go away. He also argued that the bureau didn’t have the legal authority to cap the price of overdraft fees, adding that the rule “should not be allowed to go into effect.”
Nadine Chabrier, senior policy and litigation counsel at the Center for Responsible Lending, responded that banks can continue offering overdraft protection as a form of credit, but they’ll have to comply with the same rules that apply to other types of credit. According to Chabrier, the new rule keeps pace with the change in overdraft protection as paper checks have been replaced with instant debits.
The lawsuit from the banks and credit unions, which was filed in Mississippi, claims the CFPB exceeded its statutory authority in applying the federal Truth in Lending Act to overdraft protection services. It also argues that several key aspects of the rule are arbitrary and capricious, and asks the court to declare the rule illegal in its entirety.
Another test for the CFPB rule is likely to be from the Republican-controlled Congress. Under the Congressional Review Act, members will have 60 days after the rule is formally submitted to introduce a resolution to disapprove it. The resolution cannot be filibustered, and needs just a simple majority in the House and Senate to pass.
Other protections previously adopted by the CFPB will remain in place regardless of what happens to the new rule. An important one is that consumers must opt in to overdraft protection, so they will know that overdrafts will be allowed — but will carry a fee. Another is guidance issued in 2022 instructing banks not to process debit-card transactions and deposits in an order that would generate unexpected overdrafts.
California lawmakers enacted two measures this year to provide further protection for consumers against overdraft and non-sufficient funds fees. Senate Bill 1075 limits state-chartered banks and credit unions from charging overdraft fees larger than the amount set by the CFPB or $14, whichever is lower. If the CFPB’s rule is blocked, that law will continue to apply to state-chartered institutions.
Another law, Assembly Bill 2017, bars state-chartered banks and credit unions from charging non-sufficient funds fees on debit-card transactions that are declined because the account is overdrawn.
Business
In a first for the country, voters in Monterey Park ban data centers
Residents of Monterey Park voted overwhelmingly to ban data centers on election day, making the San Gabriel Valley city the first in the nation to do so by public vote.
As of Wednesday, 86% of votes were in favor of Measure NDC, the city ban, according to the Los Angeles County registrar-recorder/county clerk.
Other cities and towns have passed moratoriums on data centers, as a wave of opposition sweeps the country. But the Monterey Park vote can only be overturned by another ballot measure, making it the most permanent data center ban in a jurisdiction.
Monterey Park’s City Council had already banned data centers by ordinance, after a proposed 247,000-square-foot data center met an outpouring of public anger and concern. The developer withdrew that plan.
That facility would have been less than 500 feet away from the nearest home, and would have used three times the electricity of the entire 60,000-person city. Residents said it would have caused noise and air pollution and driven up electricity rates.
“This ensures long-lasting protections for current and future generations,” Amy Wong, co-founder of the group San Gabriel Valley Progressive Action, said of the vote. “It means that future city councils cannot overturn a data center ban, even if data center developers wanted to spend money to fund pro-data center candidates.”
The measure had no formal opposition. The developer of the proposed facility, investment firm HMC StratCap, said it wouldn’t engage in the ballot fight when it withdrew in March.
The Data Center Coalition, an industry trade group, expressed disappointment in the vote.
“It sends a signal that the area is closed for business, both for data centers and for other significant economic development projects,” state policy director Khara Boender said.
“It deprives local residents of the opportunity to compete for jobs and investment, while also causing the area to relinquish substantial long-term economic investment, high-wage jobs, and critical tax revenue to neighboring areas or other states.”
SGV Progressive Action worked with hyperlocal groups including No Data Center Monterey Park to rally support for the measure.
The group is now focused on stopping data center proposals in the City of Industry and fighting a move by City of Industry, Santa Fe Springs, Vernon and City of Commerce to welcome data centers and other industry with fast-tracked permitting and tax incentives.
City of Industry, in the San Gabriel Valley, and Vernon, south of downtown L.A., are primarily industrial areas, each with around 300 permanent residents. They are employment centers, and tens of thousands of workers commute in daily.
There has been little vocal opposition to data centers among the few residents of these cities. Wong said the protest is primarily coming from the surrounding neighborhoods.
“If a data center gets built in City of Industry, residents across the region would bear the brunt of pollution and increased utility costs,” Wong said, noting that it is surrounded by 16 other cities and unincorporated communities.
Data center proposals have been limited in California compared to Virginia, Texas, Georgia, Illinois and Arizona, which sit at the center of a recent boom in hyperscaler facilities to power artificial intelligence.
California has the third-most data centers in the country, with 300, but high electricity rates, expensive land and regulatory hurdles mean that fewer, and smaller, facilities are currently planned than in other hotspots.
That doesn’t mean opposition hasn’t been fierce. In Coachella and Imperial County, residents are showing up in droves to protest local proposals.
In the San Gabriel Valley, Montebello, El Monte and Baldwin Park have all enacted temporary moratoriums, and Alhambra recently banned data centers as part of a zoning code update.
Wong said she hoped the ballot measure vote would galvanize the opposition. “The vote is a testament to the people power of our region,” she said. “Our region is worth protecting, and we won’t let data centers determine our future.”
Business
Rent-hike ban to protect fire victims ends despite gouging concerns
A rule intended to prevent rent gouging in the wake of the Eaton and Palisades fires has lapsed in Los Angeles County, possibly exposing some renters to hikes.
The executive order that blocked rent increases was issued by Gov. Gavin Newsom amid the devastating wildfires last year. Under the order, landlords couldn’t increase rents by more than 10% above their prefire levels.
The rule, which was supposed to be temporary and was repeatedly extended, ended Friday after a vote to extend it again failed to garner enough votes. Supervisor Lindsey Horvath, whose district includes Pacific Palisades, sounded the alarm in a motion to extend price protections that failed to pass at the Board of Supervisors’ May 19 meeting.
“These price gouging protections continue to be necessary as construction and rebuilding continue, and as thousands of people remain displaced,” the motion said. “Families which signed short-term leases could face drastic price increases of 50% or more without further price gouging protection.”
Los Angeles County is home to more than 1 million rental properties, though not all of them needed protection from the new rule. There are already stricter rent increase caps for many residences, depending on the location, type and age of the building. Despite the rent control in the region, the people of Los Angeles pay among the highest rents in the country.
It is uncertain whether renters will face rapidly rising rents now that the protection has lapsed. But some real estate experts and policymakers said there was no need for the temporary rule that was part of the governor’s state of emergency.
Supervisors Kathryn Barger, Janice Hahn and Holly Mitchell abstained from voting on the motion to extend the protection, while Supervisors Hilda Solis and Horvath supported it.
“I abstained because I did not see sufficient evidence to justify extending this emergency ordinance, nor did I see evidence to eliminate it entirely,” Hahn said.
Barger’s office said she supported allowing the protections to sunset while waiting to see whether new information emerged.
“Market data already shows countywide rents are only about 2% above pre-emergency levels and rental inventory has grown,” Barger representative Helen E. Chavez Garcia said. “The Supervisor is also mindful of the burden these ongoing protections place on small property owners throughout the county.”
Mitchell did not immediately respond to a request for comment.
There haven’t been steep rent hikes in neighborhoods within three miles of the Palisades fire, according to a Times analysis of data from Zillow, the property listing company.
In ZIP Codes within three miles of the Palisades fire, rent increased 4.8% from December 2024 to April 2025. In areas around the Eaton fire, which destroyed swaths of Altadena, rent jumped 5.2% in the same period.
In L.A. County, ZIP Codes farther from the fires saw only about a 2% increase.
A landlords representative, Jesus Rojas of the Apartment Owners Assn. of Greater Los Angeles, told the supervisors during public comment at the meeting that the county’s rent-gouging rules have “long outlived the emergency they were intended to address” and are now being “wrongfully used to harm thousands of rental housing providers throughout the county.”
“There is no proof that multifamily rental housing providers are hugely increasing rents for impacted homeowners,” Rojas said.
Indeed, there are strong signs that the property market in the Los Angeles area has at last begun to cool.
L.A. metro-area rent prices recently fell to a four-year low, with the median rent slipping to $2,167 in December.
Meanwhile, condominium sales had their slowest start of the year in decades. Condo sales in Los Angeles have plummeted to a 20-year low, with fewer than 2,000 units sold in January and February — the worst start to the year since 2005.
Newsom defended the price-gouging protections shortly after they went into effect.
“In the days following the Los Angeles firestorms, we worked quickly to protect Los Angeles survivors from any form of exploitation,” he said in February 2025. “The state has the tools in place to not only block price gouging during this emergency, but also to prosecute bad actors.”
The Los Angeles County Department of Consumer and Business Affairs said it received more than 2,000 complaints after the fires, alleging that retailers and landlords were taking advantage of people put in hardship by their losses, and sent out more than 2,000 cease-and-desist letters to businesses and landlords for alleged price gouging, said Morine Merritt, who oversees department investigations into consumer and real estate fraud.
“Close to 90% of the complaints that we received involved allegations of rent increases,” Merritt said in an interview. Now that the fire-related protections have expired, existing laws and “regular market conditions determine price increases for goods and services, including rents,” she said.
Crackdowns on fire-related rent gouging have been rare, said Chelsea Kirk of the activist organization the Rent Brigade, which analyzed L.A. County’s rental market in the year after the fires. It reported 18,360 potential examples of price gouging in listings but said that few lawsuits had been filed by authorities so far.
Last week, Rent Brigade announced what it said was the first private civil lawsuit brought by a family that claimed to be rent-gouged in the aftermath of the wildfires. Plaintiffs Randall and Candy Renick, whose Altadena home was damaged, said they were charged nearly three times the maximum permitted rate for nearly 10 months. They seek restitution of $96,000 plus civil penalties and attorneys’ fees.
The rental market has probably stabilized since the fires, Kirk said, but other families may still be “locked into illegal rents” that they agreed to pay when they were in a rush to find housing after they were displaced.
Business
Read Nick Bilton’s Letter to Scott Pelley
Dear Mr. Pelley:
I meant what I said in my letter last week to the 60 Minutes team: joining 60 Minutes is the honor of my career and I am grateful to be working alongside the people who have contributed to the most important television journalism brand this country has ever produced. While I’m new to 60 Minutes, I’ve devoted my career to investigative journalism and storytelling. I started this job excited to collaborate and to benefit from the wisdom and experience of the 60 Minutes veterans, with you among them. For that reason, one of the first things I did in my new role was call you to talk and invite you to dinner. It is a profound disappointment that you rejected that overture and chose ambush instead. Yesterday, you hijacked my first meeting with staff to disparage me, my qualifications, and my intentions with remarkable incivility and contempt. I welcome a diversity of viewpoints and respectful debate among the team, but this was nothing of the sort. Yesterday’s performative display of hostility enacted in front of the staff instead of in a civil, private conversation-demonstrated that you have no interest in contributing to the future success of the show, or approaching my new tenure with a mind open to collaboration and progress. I am here to deliver first-in-class news programming, not to make headlines about newsroom drama. I am eager to work alongside those who share this goal.
Despite yesterday’s misconduct, I had hoped that in sitting down with you today we could find a path forward together. You made clear that you are not interested in such a path.
Your antipathy to the future of the show has come through loud and clear. And I have heard you. I therefore write on behalf of CBS News, Inc. (“CBS”) to inform you that your employment with CBS is terminated for cause effective immediately. Enclosed is your formal termination letter.
Sincerely,
Nick Bilton
Executive Producer, 60 Minutes
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