Manatt Financial Services Partner Bryan Schneider was quoted in an American Banker article about how regulators are trying to punish banks for applying multiple nonsufficient funds (NSF) fees to accounts that are already overdrawn.
The FDIC issued guidance in August 2022 informing banks that charging NSF fees can be “unfair” in certain circumstances and fee disclosures could be considered “deceptive.” The Minnesota Bankers Association sued, challenging the FDIC’s authority to issue the guidance without going through the rulemaking process.
"This is a very important issue in which a [regulator] is creating a new obligation without going through the thoughtful and deliberative rulemaking process," Schneider said. "Agencies feel compelled to move very quickly. But there are other times when they have the authority to move, but it has to be through the specific process."
Subscribers can read the full American Banker article here.