July 5, 2022

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Dwelling Dems phone on JPMorgan Chase to refund pandemic-era overdraft service fees

A team of House Democrats from New York this week termed on JPMorgan Chase to return overdraft charges collected through the COVID-19 pandemic and to end charging them altogether in the potential.

“Through the pandemic, the largest banking institutions in the United States charged billions of pounds in overdraft service fees at a time when hundreds of thousands of People have been battling fiscally,” the lawmakers wrote in a letter dated June 16. It was signed by Reps. Carolyn B. Maloney, Kathleen Rice, Gregory Meeks and Tom Suozzi.

The letter states that JPMorgan Chase collected practically $1.5 billion in overdraft service fees in 2020, which was “much more than any other bank.” It cites reporting centered on FDIC filings. 

“The overwhelming bulk of overdraft costs are paid out by individuals who are inclined to carry reduced balances and have rather small month-to-month deposits. These fees also cause disproportionate harm to minimal-cash flow buyers and communities of coloration,” the lawmakers wrote. 

“It is deeply troubling that money institutions, which includes our nation’s biggest financial institutions, profited off fees billed to those struggling the most as the COVID-19 financial crisis still left several family members in extreme economic distress,” they ongoing. 

The representatives also pointed out that New York was a single of the most difficult-strike states by the pandemic and observed a latest assessment that showed Prolonged Island and New York Metropolis had been among the top rated locations with the most overdraft charges in the point out. 

“On Prolonged Island, knowledge signifies that financial institutions charged nearly $70 million in overdraft service fees. JPM operates a person-hundred and forty areas on Lengthy Island, and estimates clearly show that the bank was liable for practically forty % of the complete charges charged to consumers in the region throughout the pandemic,” the letter states.

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It also noted that in March 2020, federal banking regulators advisable that banking institutions perform with prospects and waive overdraft fees all through the pandemic. The lawmakers urged JPMorgan Chase to refund the overdraft charges charged to consumers during the pandemic and to improve its overdraft procedures “to quit charging these predatory service fees in the future.” 

JPMorgan Chase did not promptly reply to a ask for for comment. 

The letter was tackled to JPMorgan Chase CEO Jamie Dimon, who also testified at a Senate listening to last month and acquired into a tense exchange with Democratic Sen. Elizabeth Warren of Massachusetts. 

FILE – In this picture illustration, a JPMorgan Chase emblem is shown on a smartphone. (Photo Illustration by Budrul Chukrut/SOPA Visuals/LightRocket by using Getty Photographs)

Warren, a longtime critic of the major banks, pushed on why they gathered overdraft costs on examining accounts throughout the pandemic. She referred to as Dimon “the king of the overdraft price,” keeping that JPMorgan collects much more than seven moments in costs for every account than its competitors.

Dimon disputed the precision of Warren’s figures. The lender states that final year it waived service fees on more than 1 million deposit accounts, including overdraft service fees, with no inquiries requested. JPMorgan Chase has an account known as Safe Banking with no overdraft fee and suggests it can make other lodging to buyers in unique predicaments.

Dimon, together with the CEOs of Citigroup, Wells Fargo, Lender of The united states, Morgan Stanley and Goldman Sachs, appeared ahead of the Senate panel as the U.S. financial system is recovering from the economic downturn. Large banks’ profits surged in the initial a few months of 2021 as the restoration took keep. They ended up capable to launch billions of pounds from their financial loan-decline reserves originally set aside in the early times of the pandemic very last 12 months.

The market, which was blamed for the Great Recession additional than a decade back, has used most of 2020 and this calendar year making an attempt to seem handy and prepared to work with debtors and businesses. Financial institutions across the place waived charges and place millions of mortgages into forbearance to shore up Americans’ distressed funds in the pandemic.

Previously this thirty day period, Ally Money announced that it is ending overdraft charges — getting the very first huge financial institution to do so across its whole business enterprise. In its announcement, the Charlotte, North Carolina-centered lender cited specifically the effect that overdraft fees have on Black and Latino homes, which are historically poorer than their white counterparts and are strike with overdraft fees extra generally.

“Overdraft expenses can be a key cause of stress,” said Diane Morais, president of shopper and commercial banking at Ally Financial institution, in a statement. “It grew to become distinct to us that the most effective way to alleviate that anxiety was to reduce individuals charges.”

Other huge banking institutions have moved to develop unique banking solutions to help clients prevent overdraft costs, which includes Financial institution of America and Wells Fargo, which also both of those now offer bank account items with no overdraft service fees. 

But financial institutions are continue to greatly reliant on overdraft service fees for profits. The field collected a lot more than $12 billion in overdraft fee profits previous calendar year alone, according to industry research.

Connected: Ally Financial ends all overdraft expenses, will become very first significant bank to do so

This tale was claimed from Cincinnati. The Related Press contributed.