LOS ANGELES — A federal choose in Texas briefly halted a plan by the Biden administration to decrease late charges on bank cards to $8 that was slated to enter impact subsequent week.
The momentary nationwide injunction imposed by Choose Mark Pittman within the Northern District of Texas is a win for the large banks and main bank card corporations, which accumulate billions in income annually in late charges and have been trying to cease the proposal from going into impact. It is usually a win for the U.S. Chamber of Commerce, which led the lawsuit on behalf of the banks.
The brand new laws that have been proposed by Shopper Monetary Safety Bureau would have set a ceiling of $8 for many bank card late charges or require banks to point out why they need to cost greater than $8 for such a charge.
The rule would convey the typical bank card late charge down from $32. The bureau estimates banks herald roughly $14 billion in bank card late charges a yr.
White Home spokesperson Jeremy Edwards stated in an announcement Friday evening, “We are disappointed that a court sided with House Republicans, big banks and special interests to hit pause on a critical measure to save American families billions in junk fees.”
Banks had sued to cease the lawsuit earlier this yr, however that they had run right into a roadblock when Pittman ordered the case moved to Washington, D.C., due to the truth that few banks function in northern Texas. Nonetheless, an appeals court docket reversed most of Pittman’s resolution and ordered him to rule on the financial institution’s request for an injunction.
Whereas Pittman did impose the injunction, he used a good portion of his order to chastise the Fifth Circuit Court docket of Appeals for sending this case again to him after he had already dominated that the case must be dealt with out of Washington. Critics of the lawsuit have referred to as the case the most recent instance of judicial “forum shopping,” the place an organization recordsdata a lawsuit in a pleasant district so as to have a larger probability of getting a positive ruling.
As a part of his reelection marketing campaign, President Joe Biden has tried to focus on his administration’s push to clamp down on what he calls “junk fees,” that are bank-related charges like late charges, ATM charges and overdraft charges.
“Every month that the credit card late fee rule is blocked will cost Americans over $800 million,” the White Home stated Friday.
Banks have seen the marketing campaign as a political battle towards their enterprise mannequin, whereas shopper advocates have seen these financial institution charges as extreme based mostly on the quantity of danger that banks and bank card corporations are taking up.
“In their latest in a stack of lawsuits designed to pad record corporate profits at the expense of everyone else, the U.S. Chamber got its way for now — ensuring families get price-gouged a little longer with credit card late fees as high as $41,” stated Liz Zelnick with Accountable.US.
