JPMorgan Chase is threatening to start charging customers for checking accounts if new federal rules limiting overdraft and late fees are enacted.
Marianne Lake, the head of consumer and community banking at JPMorgan, told the Wall Street Journal that the company will pass the burden of the new regulations on to its 86 million customers.
“It is not practical for many of the services to be free if we won’t be able to draw from those profit pools,” Lake said.
The Consumer Financial Protection Bureau (CFPB) proposed a limit to the fees in January, capping the charges for overdraft fees at as low as $3. The CFPB enacted the measure in March, saying it would help lower-income Americans who often rack up substantial debt from not having enough money in their accounts.
The banking industry made close to $9 billion in 2022 from overdraft charges, which average $26 per charge, according to the agency.
Lake said the limit to the fees would make it impossible for Chase to continue allowing customers to use its checking and wealth management systems for free.
“The changes will be broad, sweeping and significant,” Lake said of her JPMorgan’s plans to start charging customers. “The people who will be most impacted are the ones who can least afford to be, and access to credit will be harder to get.”
Chase predicts that other companies will follow suit if the regulations go into effect.
Dennis Kelleher, president of the economic think tank Better Markets, said banks are being dishonest when they claim their only choice is to pass the added costs of regulation onto consumers.
“Yet again, banks are dressing up their attempts to maximize their own profit under the guise of what’s good or bad for customers,” he told The Journal.
It’s unclear if the full rules will go into effect. They could be completely scrapped if former President Donald Trump is reelected in November. Banking industry groups have sued to stop the CFPB’s new rules.