If the Consumer Financial Protection Bureau’s (CFPB) overdraft fee rule is soon eliminated as some experts predict, state-chartered credit unions in California must still comply with the state’s overdraft-fee dollar cap. That cap is $14 per overdraft as a result of Senate Bill 1075 passed by the state’s legislature last year.
Over the past several months, California’s state-chartered credit unions have been navigating the state-versus-federal regulatory landscape on overdraft protection service fees as a confluence of factors surrounding the CFPB’s rule and the state’s SB 1075 (effective January 1, 2026) created uncertainty. However, recent events provide clarity going into next week.
In Washington, D.C. last week, the U.S. Senate nullified the CFPB’s overdraft rule by voting 52-48 to advance a resolution of disapproval on the rule. The resolution would prevent the rule, which caps overdraft protection fees at $5 for financial institutions with more than $10 billion in assets, from going into effect via the Congressional Review Act.
Last year, America’s Credit Unions filed a legal challenge the same day that the CFPB issued its rule, seeking to overturn it. Eighteen state credit union leagues/associations also filed a legal brief in support of the challenge.
Going forward, the Senate’s resolution from last week must pass the U.S. House and be signed by President Donald Trump to take effect. The House Financial Services Committee passed its resolution of disapproval earlier this month, but it still must go to the House floor for a vote.
In addition, the White House issued a Statement of Administration Policy supporting the resolution prior to the Senate’s vote. It notes that the president’s advisors would recommend he sign the resolution into law in its current form.
The focus is now on the House, where traction on the overdraft rule has been delayed due to a dispute on a procedural vote. A vote will happen after members of Congress return from recess soon.
The delay in a House vote does not reflect concerns from the Republican caucus on the policy implications of overdraft rule. It is tied to a separate issue.
In the House, members of Congress vote on a “rule” and then separately vote on each bill listed in the rule for final passage. A vote on final passage of a bill or resolution cannot proceed without the “rule” being approved.
On Tuesday, nine House republicans voted no on the “rule” for the CFPB overdraft fee resolution of disapproval and three other measures. They did so to try and force a vote on proxy-voting for congressional colleagues who are new parents — a non-related issue.
House Speaker Mike Johnson philosophically disagrees with proxy voting and decided to recess until further notice to avoid further disruption on the House floor.
Taking a step back, it was clear the 2024 legislative session in California was particularly impactful for credit unions as it ended last August. It kicked off with the introduction, ensuing fight, and eventual defanging of SB 1075. The bill was authored by Sen. Steven Bradford.
As introduced, SB 1075 would have required a five-day waiting period before assessing an overdraft or non-sufficient funds (NSF) fee and would limit a credit union from charging more than three of these fees per month. After months of hard work, grassroots efforts, and direct lobbying at the California Credit Union League’s Government Relations Rally (GRR) that year, the League was able to have the bill completely amended.
Now, SB 1075 will require credit unions to notify members when they have been assessed a fee, and then in 2026 to not charge more than $14 dollars per fee. It was unclear over the past several months if any CFPB rule’s dollar amount provision would supersede the $14 provision noted in California’s SB 1075.
“Credit union leaders should remain vigilant, closely monitoring state developments to adapt their overdraft fee policies and ensure compliance,” said Robert Wilson, senior vice president of state government affairs for the California Credit Union League and Nevada’s Credit Unions.
