Sen. Cory Booker (D-NJ) speaks during the confirmation hearing of Attorney General nominee Merrick Garland before the Senate Judiciary Committee, Washington, DC, February 22, 2021.
Al Drago | Pool | Reuters
WASHINGTON — Urged by Sen. Cory Booker and Raphael Warnock are the CEOs of 10 major banks that waived overdraft and insufficient funds fees that could cost some Americans more than $100 a day after the failures of Silicon Valley Bank and Signature Bank.
In letters dated Tuesday, the New Jersey and Georgia Democrats asked the banks to help customers whose payments were delayed or missing because of the collapse of SVB and Signature earlier this month. The letters went to the CEOs of Wells Fargo, US Bank, Truist Financial Corp., TD Bank, Regions Financial Corp., PNC Bank, JPMorgan Chase, Huntington National Bank, Citizen’s Bank and Bank of America.
The senators separately urged key regulators to put a brief moratorium on fees “while the disruption in payments is resolved.” The letter was sent to Federal Reserve Chair Jerome Powell; Michael Hsu, acting comptroller of the Currency; Todd Harper, chairman of the National Credit Union Administration; and Martin Gruenberg, chairman of the Federal Reserve Insurance Corp.
“Disruptions throughout the banking industry this month have confused consumers and jeopardized the paychecks of millions of American workers,” Booker, who is a member of the Senate Committee on Small Business and Entrepreneurship, and Warnock wrote.
The fees, which can be as high as $111 a day for a low account balance or up to $175 in low account fees, “compound on the difficult financial situation customers are in, especially when their lack of funds are due to an unprecedented, unexpected delay,” the senators said.
JPMorgan and PNC Bank declined to comment. Other banks that received the letters did not immediately respond to requests for comment.
The FDIC SVB was closed on March 10 after the bank announced a nearly $2 billion loss on asset sales. The agency said official SVB checks will continue to clear and the assets will be accessible the next day.
Regulators shut down New York-based Signature Bank days later in an effort to prevent a potential banking crisis. Many of its assets have since been sold to Flagstar Bank, a subsidiary of New York Community Bancorp.
Booker and Warnock said banking customers whose paydays fell between March 10 and March 13 did not receive or deposit checks from payroll providers that bank with SVB and Signature Bank. They also noticed that online merchants Etsy Customers were notified of payment delays because it used SVB’s payment processing.
The senators also cited an unrelated, nationwide technical glitch on March 10 that caused missing payments and incorrect balances for Wells Fargo customers.
“These delays will do little harm to affected customers who are part of the sixty-four percent of Americans who live paycheck-to-paycheck, who are often ‘minutes to hours away from having the money they need. to cover’ the costs that lead to the overdraft that insufficient funds pay,” Booker and Warnock wrote.
They praised the steps taken by the Treasury Department and the FDIC to prevent a possible economic disaster by ensuring access to depositor funds above the $250,000 FDIC-guarantee threshold and creating a new, one year loan to financial institutions to safeguard deposits in times of stress.
Treasury Secretary Janet Yellen said Tuesday that the department is prepared to guarantee all deposits for financial institutions beyond SVB and Signature Bank if the crisis worsens.
“In line with the government’s swift, decisive response to help businesses and individuals who were immediately helped to contain the wider impact of these bank failures, we urge you to act with similar urgency to prevent families Americans from unexpected and unwarranted charges,” the senators wrote to the bank’s CEOs.