In a letter to JPMorgan Chase CEO Jamie Dimon despatched Thursday, Democratic lawmakers are calling on the financial institution to rethink imposing new charges on its 80 million retail prospects, together with doubtlessly mountaineering checking account charges on tens of hundreds of thousands of them.
Sens. Elizabeth Warren (D-MA) and Chris Van Hollen (D-MD) expressed considerations over latest feedback by Marianne Lake, Chase’s CEO of client and neighborhood banking, who stated the financial institution would take into account rising checking account charges to make up for the misplaced income associated to a proposed cap on overdraft charges.
In an interview with the Wall Road Journal final month, Lake stated that the brand new guidelines proposed by the Client Monetary Safety Bureau (CFPB) would make banking costlier for customers, particularly for low-income prospects, as a result of banks can be compelled to impose new charges on providers which can be at the moment free to make up the misplaced income. Talking with traders earlier this 12 months, Lake stated the altering regulatory atmosphere might imply that “free checking may only be attainable for the most affluent Americans.”
Lake didn’t say how a lot the checking account charges could be or what accounts they might apply to within the WSJ interview. Chase declined to touch upon the letter.
The fee-for-checking plan isn’t sitting nicely with Warren and Van Hollen, who sit on the Banking, Housing, & City Affairs subcommittee on monetary establishments and client safety.
“JPMorgan Chase’s potential imposition of new costs on its customers in response to legal and long-overdue efforts to limit abusive fees—at a time when the then bank is making record profits and funneling those profits straight into the pockets of its executives—is outrageous,” the senators’ letter, obtained by Fortune, reads. “JPMorgan Chase should put a hold on any plans to levy additional charges on working Americans.”
Warren and Van Hollen are actually asking Dimon and JPMorgan Chase to reply questions associated to the overdraft charges the financial institution collects, what new charges it plans to impose on prospects, and the way it plans to guard low- and middle-income customers.
JPMorgan Chase collected $1.1 billion in overdraft charges in 2023, probably the most of any U.S. financial institution. Nonetheless, Warren’s letter notes that if the financial institution hadn’t collected any, its earnings can be lowered by simply 2%, and questioned whether or not that minimize would “justify” imposing new charges on prospects. The senators recommend different avenues for JPM to make up a number of the loss.
“Will JPMorgan Chase reduce its stock buybacks instead of imposing new fees on its customers?” the letter asks. “Will JPMorgan Chase reduce executive pay instead of imposing new fees on its customers?”
The CFPB—which Warren established—has proposed capping overdraft charges to as little as $3, which the company estimates will save customers at the least $3.5 billion annually. At the moment, Chase expenses a $34 overdraft charge per transaction that overdraws an account by greater than $50 (as much as three per day).
And checking accounts at Chase can at the moment include a month-to-month charge hooked up, however it’s usually straightforward to skirt if a buyer meets sure necessities, like sustaining a direct deposit into the account.
Lauren Saunders, affiliate director of the Nationwide Client Regulation Middle, beforehand instructed Fortune that prospects ought to “take their business elsewhere” if Chase ups the checking account charges.
There are many banks, together with online-only establishments like Ally, that provide fee-free accounts, in addition to a lot smaller overdraft charges than Chase (in the event that they cost the charges in any respect).
“Chase is more reliant on overdraft fees than other banks and so they’re looking to squeeze consumers in another way,” Saunders stated. “Hopefully other banks who have made more significant changes to their overdraft practices can see a sustainable way to have bank accounts without big monthly fees.”
