Sens. Booker, Warnock press banks on overdraft fees

WASHINGTON — Sens. Cory Booker and Raphael Warnock have urged the CEOs of 10 major banks to waive overdraft and nonsufficient fund fees that would cost some Americans greater than $100 a day within the wake of the failures of Silicon Valley Bank and Signature Bank.

In letters dated Tuesday, the Latest Jersey and Georgia Democrats asked banks to assist customers whose payments were delayed or missing as a consequence of the collapse of SVB and Signature earlier this month. The letters went to the CEOs of Wells Fargo, U.S. Bank, Truist Financial Corp., TD Bank, Regions Financial Corp., PNC Bank, JPMorgan Chase, Huntington National Bank, Residents Bank and Bank of America.

The senators individually urged key regulators to position a temporary moratorium on the fees “while the disruption in payments is resolved.” The letter was sent to Federal Reserve Chair Jerome Powell; Michael Hsu, acting comptroller of the Currency; Todd Harper, chairman of the National Credit Union Administration; and Martin Gruenberg, chairman of the Federal Reserve Insurance Corp.

“Disruptions across the banking industry this month rattled consumers and threw into jeopardy the paychecks of tens of millions of American employees,” wrote Booker, who’s a member of the Senate Committee on Small Business and Entrepreneurship, and Warnock.

The fees, which might reach as much as $111 a day for low account balances or as much as $175 on low account fees, “compound the difficult financial situation customers find themselves in, particularly when their lack of funds is as a consequence of an unprecedented, unexpected delay,” the senators said.

Wells Fargo and PNC Bank declined to comment. JPMorgan Chase said through a representative that a team is “assessing whether any of our customers were impacted and the way we will support them.”

A representative for TD Bank told CNBC that it’s reviewing the letter and that it “implements changes for our customers which might be designed to assist them higher manage their money and take control of their funds.” 

The opposite banks that received the letters didn’t immediately reply to requests for comment.

The FDIC closed SVB on March 10 after the bank announced a virtually $2 billion loss in asset sales. The agency said SVB’s official checks would proceed to clear and assets could be accessible the next day.

Regulators shuttered Latest York-based Signature Bank days later in an effort to stall a possible banking crisis. A lot of its assets have since been sold to Flagstar Bank, a subsidiary of Latest York Community Bancorp.

Booker and Warnock said banking customers whose paydays fell between March 10 and March 13 were unable to receive or deposit checks from payroll providers banking with SVB and Signature Bank. In addition they noted that online merchant Etsy notified customers of payment delays since it used SVB payment processing.

The senators also cited an unrelated, nationwide technical glitch on the March 10 that caused missing payments and incorrect balances for Wells Fargo customers.

“These delays will disproportionately harm the impacted customers who’re a part of the sixty-four percent of Americans living paycheck-to-paycheck, who are sometimes ‘minutes to hours away from having the cash obligatory to cover’ expenses that result in overdraft nonsufficient fund fees,” Booker and Warnock wrote.

They praised steps taken by the Treasury Department and the FDIC to stem a possible economic catastrophe by ensuring access to depositor funds over the $250,000 FDIC-guarantee threshold and making a latest, one-year loan to financial institutions to safeguard deposits in times of stress.

Treasury Secretary Janet Yellen on Tuesday said the department is ready to ensure all deposits for financial institutions beyond SVB and Signature Bank if the crisis worsens.

“According to quick, decisive government response to help the companies and individuals who were helped immediately with the intention to contain the broader fallout of those bank failures, we urge you to act with similar urgency to backstop American families from unexpected and undeserved charges,” the senators wrote to the bank CEOs.